To the point week of 1-8-09

276

WHEN THE U.S. CLOSED ITS fiscal year “books” at the end of September, this country had a deficit of $455 billion. In other words, we’re in debt to others by $455 billion.

Think your mortgage on steroids.

Major steroids.

When our country needs money that it doesn’t have, it can “borrow” money on the international market. In other words, some country loans us money by “buying” our promissory note.

I can see that scribbled on a piece of paper now: “I.O.U. $455 billion”.

With the war continuing in Iraq and Afghanistan and the federal government now bailing out major industries and banks all over the country; economists now predict that by the end of 2009, the deficit of this nation will stand at $1 trillion.

That’s $1,000,000,000,000.

And you think you’re credit card balance is high.

I just keep seeing that guy in the pirate costume singing about getting your credit report free online.

I wonder what one’s credit score is when they are $1 trillion in debt?

Now all of this seems like smoke and mirrors until we begin to understand the possible ramifications of this huge debt – the largest deficit that this country has had since World War II.

Most of our debt is held by foreign governments, with the biggest holder of our credit being China.

As our country needs to borrow more and more money just to keep going, at some point countries will simply not have the resources to keep loaning us money.

Except China.

Now I’m not an alarmist, but if this country gets to the point that the only place that we can get money to continue operating is China, then that country will have the opportunity to literally “hold us hostage” not only on payback schedules and interest rates; but possibly on other things that would cripple our economy.

So what do we do?

Well, I’m here to tell you that – about two weeks before Barack Obama is sworn in as President of this country – that we are all going to see some tough decisions made at the federal level of our government.

The choices?

Either some programs get their funding drastically cut or eliminated all together; or more money will have to be generated to offset the debt.

At that point we won’t worry about paying anyone back; we’ll just be happy with not having to borrow as much. So how is that extra money generated?

Anyone? Anyone?

Bueller?

For all of the posturing that was done by both candidates during the Presidential election. For all of the speeches that were given by Senators and Congressmen. For all of the promises that have been made.

Your taxes will be going up.

It’s not a pretty thing to tell you; but unless we as a nation are willing to give up some things that we already have – we’re going to have to pay more for what we have.

And we do that through taxes.

Now remember that I told you this before the inauguration, so later in 2009 when a tax increase is proposed and everybody freaks out on the new administration, you’ll remember that this was known well before they even took office.

It’s not a pretty picture, but it’s a picture that is going to be painted.

Unless we see drastic cuts in federal programs.

“So, the federal government is filled with ‘pork’ and waste anyway, let them cut programs” you say.

Got a guess on what they’ll cut first?

How about state programs that receive federal dollars. Imagine if the federal government looked at the state government and said that certain programs now needed to be funded at the statehouse level.

Federal spending cut – state spending up.

Guess what happens to your state taxes?

Well, probably at that point several options might come into play.

Indiana’s Governor – who was reelected partially on a cry that Indiana was one of only a handful of state’s that was operating in the black, now is calling on state agencies to ‘hold the line’ on spending and is talking about dark days ahead here in the state.

Legislators in the statehouse certainly don’t want to be saddled with raising your taxes; so they’ll move state-funded programs to the local level.

Don’t think that will happen? The state used to give money to local school corporations to help cover transportation costs of getting kids to school.

It doesn’t anymore. That’s left to your local property taxes.

See? Everything runs down the same funnel – it’s just a matter of where you prefer to see your money go – county property taxes? State Income Taxes? Federal Income Taxes?

Is the light at the end of the tunnel a train? It could be if the state sees federal money drying up and falls back on the only cash cow that it has.

Can you say “Casino Revenues”?

I knew that you could.

Switzerland County and others have done a remarkable job of fighting off attempts by state government to take an even larger share of casino revenues; but only a fool would believe that at some point the state isn’t going to come back for more.

So what next? I believe that it is time for county government to pull the reigns back on casino revenue distribution. If the casino revenues are going to continue to do good works for the people of this county in the future, then prudent judgments – which may be unpopular – need to be made.

Many agencies and others have now gone past what they ‘need’ and are now simply asking for what they ‘want’. Sure, it’s nice to have new ‘toys’, but that sometimes frivolous spending now may mean no spending at all in the future.

Are there programs that need to continue? Absolutely, but in the face of what’s sure to be economic troubles on the horizon, maybe it’s time to build the boat before the flood comes.