IBJOpinion

EDITORIAL: Overspending saps nation's vigor

 IBJ Staff
February 20, 2010
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IBJ Editorial

To appreciate the gravity of the skyrocketing federal debt, and how much this year’s elections should focus on a fix, consider the zinger Gov. Mitch Daniels fielded on his trade mission to China last fall.

Daniels was imploring a major automaker to choose Indiana for its first U.S. office when the chief financial officer dropped this bombshell: The company wouldn’t consider an Indiana office—not because Indiana was a poor place to do business, but because it had no plans to operate in the United States, period.

Europe, not the United States, had the best growth prospects, the official said.

Why? America’s escalating debt.

Not all Chinese business leaders frown on U.S. prospects. As IBJ has reported, Chinese investors are providing badly needed capital.

But the debt clearly is becoming a big problem.

U.S. Sen. Evan Bayh has sounded an alarm for the past couple of years, and said during his retirement announcement Feb. 15 that an impasse over the deficit in the Senate was one reason he could no longer be effective in what once was considered the world’s greatest deliberative body.

The Office of Management and Budget projects federal debt held by the public to shoot from its current level of about 50 percent of gross domestic product to 85 percent of GDP by 2018. And the projection shows no sign of returning to Earth.

To put this in perspective, U.S. debt levels have ranged near 40 percent of GDP since the 1950s. Also, the international standard followed by the European Union and International Monetary Fund is 60 percent of GDP, a level we’re on course to crash through this year or next.

There will be consequences for inaction. Economic growth will slow and living standards will fall as Americans struggle to pay interest on the debt.

Chastened by a string of Republican victories, including Scott Brown’s election to Ted Kennedy’s former Senate seat in Massachusetts, President Obama has returned to talking up fiscal responsibility.

Many economists believe Obama did the right thing by pumping money into the economy to try to prevent a free-fall. But many of the same economists also warn that our free-spending ways cannot continue.

Given the intractable political rancor in Washington, Congress should reconsider handing the problem to an independent commission that can put forth a set of actions. As has been the case in the past with military base closings, Congress should require itself to vote the entire set of actions up or down.

Congress is resisting committing itself to such a commission because it fears it wouldn’t like the recommendations.

As we Hoosiers consider whom to send to Congress this fall, we should ask pointed questions and demand specific answers from candidates. A commitment to fiscal responsibility should trump grand plans that add to the deficit—and to the debt burden we’ll leave behind for our children and those of future generations.•

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To comment on this editorial, write to ibjedit@ibj.com.

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  1. With Pence running the ship good luck with a new government building on the site. He does everything on the cheap except unnecessary roads line a new beltway( like we need that). Things like state of the art office buildings and light rail will never be seen as an asset to these types. They don't get that these are the things that help a city prosper.

  2. Does the $100,000,000,000 include salaries for members of Congress?

  3. "But that doesn't change how the piece plays to most of the people who will see it." If it stands out so little during the day as you seem to suggest maybe most of the people who actually see it will be those present when it is dark enough to experience its full effects.

  4. That's the mentality of most retail marketers. In this case Leo was asked to build the brand. HHG then had a bad sales quarter and rather than stay the course, now want to go back to the schlock that Zimmerman provides (at a considerable cut in price.) And while HHG salesmen are, by far, the pushiest salesmen I have ever experienced, I believe they are NOT paid on commission. But that doesn't mean they aren't trained to be aggressive.

  5. The reason HHG's sales team hits you from the moment you walk through the door is the same reason car salesmen do the same thing: Commission. HHG's folks are paid by commission they and need to hit sales targets or get cut, while BB does not. The sales figures are aggressive, so turnover rate is high. Electronics are the largest commission earners along with non-needed warranties, service plans etc, known in the industry as 'cheese'. The wholesale base price is listed on the cryptic price tag in the string of numbers near the bar code. Know how to decipher it and you get things at cost, with little to no commission to the sales persons. Whether or not this is fair, is more of a moral question than a financial one.

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