Nick Fickling: We’ll be digging out from a big mess now
Vail, CO, Colorado
At this time of year, many of us are making resolutions to “do things differently” and some just “to do things.” With the financial crisis affecting us all, this year is different.
For many years, indeed for many people’s entire lives, this will be the first year that our culture of entitlement will be threatened. Until now we could always afford things: that new car, dress, honeymoon in Bali, computer, adventure to Everest base-camp and yes, that second home in our valley. There was always a clever way to leverage funds no matter how low your credit score. Credit has been easy and many of us have developed the habit of spending freely.
Unfortunately, our government has also been spending too freely, believing that cutting taxes would generate yet more spending that would keep the booming economy surging ever onward and upward.
In 2008 all that came to a grinding halt, and we now find ourselves in a hole we have not been in before. This is perhaps the first time in our history that not only is there a burgeoning national debt but also an unbelievably high level of personal debt. In the past we have had one or the other, but rarely both. “Restraint” and “saving” are words that we must reintroduce to the lexicon.
Societal debt can only go higher in the short term as our national infrastructure urgently needs work. Simultaneously, we are fighting two wars and billions of dollars are being promised to bailout businesses that in normal times no self-respecting businessman would see sense in saving. With the shrinking economy the income from tax revenue has plunged, and state and federal programs are being threatened.
Some have suggested we all go out and spend freely, so the economy will have a softer landing. That is great theory but one lacking in reality. The top 5 percent may be flush with cash, but most of us are tightening our belts and do not have the funds to go on a spending spree.
It is not just that people are worried about survival and are hunkering down, but that they do not have the spare cash hanging around and no way of borrowing more. Telling people to spend more will simply not work this time, for even those who do have loose change in their pockets are not minded to spend it.
On Jan. 20 we welcome in a new administration. There is hope that Obama will be able to wave a magic wand and our nightmare will be over. It appears that Obama is planning to massively increase government programs, thus stimulating the economy and getting people back to work.
Such measures are needed, but we must not forget that by spending money the government will be increasing the national debt still further and extending the repayment period, thereby putting off the day when we need to raise the taxes to pay the debt down.
I hope that Obama is the greatest president this country has ever had. That is what we badly need, and we should resolve this new year to give him our full support. There is, however, a great danger in such massive increases in government spending and investment in private companies that we should be wary of.
Control of the way money is spent in society gives power to those spending the cash. When we are doing the spending then we have the power. When our president and Congress are making a greater proportion of the spending decisions, and controlling so much, we need to be even more vigilant of corruption and abuse of power than usual.
We have suffered under a president who has failed to control spending, and a period in which corruption has appeared rampant. In this new year we not only need to be full of hope but also vigilant. Obama appears to be the right man for the job but we must not give him or the new Congress too long (or expensive) a honeymoon!
Nick Fickling is retired from the British military and lives in the Vail Valley. You can reach him at email@example.com