Tag Archive for 'Ted Fishman'

Making hard financial decisions

Congress and the Obama Administration are in a great debate over our current financial condition of deficit spending. For several years, the U.S. government has been spending more than it takes in, which for governments, businesses and households alike, is a scenario that cannot go on forever.

In order to appreciate the budget balancing task, it’s important to understand that the federal budget is made up of two key financial commitments:  discretionary spending, which Congress has to renew each year, and mandatory spending, which renews automatically. Social security, Medicare, Medicaid and certain national defense items comprise mandatory spending.

The mandatory stuff amounts to about 60% of the annual federal budget, with about 35% for discretionary and 5% to pay interest on the national debt. But about half of the discretionary budget is discretionary defense spending, which only leaves about 18% of annual federal spending for everything else.

So, there you have it:  The easiest part of the debate is over less than 20% of the federal budget. Since all of this piece of the pie can’t be eliminated, you should be getting the picture that in order to move the deficit cutting needle enough to reverse the current deficit trend, hard decisions will have to be made in defense and entitlements. And that’s the hard part of the debate.

But debate it and fix it we must. Because, while the U.S. still has more assets than liabilities, that won’t last long if we continue to spend more than we take in.

We wanted to know what you thought about this issue, so last week we asked this question in the Newsletter and on our website: Funding for “entitlements,” like Social Security and Medicare, are a major part of the U.S. government’s unsustainable long-term budget deficit. Would you be willing to include changes to these programs to reduce the long-term deficit?  The results were impressive.

Those who believe everything should be put on the debate table represented 83% of our respondents. Those who think entitlements should be off the table came in at just 11%, with the remaining 6% saying they were not sure.

One thing is for sure: The question is not whether difficult financial decisions will be made - that is coming, sooner rather than later. The question is whether Americans can gin up the discipline and leadership to make the hard decisions ourselves before our non-American creditors have to do it for us.

Based on our poll results, the electorate seems to be more disciplined than our political leaders.

Thanks for being part of my community. I’ll see you on the radio - and on the Internet.

Recently on The Small Business Advocate Show, I talked with my friend and Brain Trust Member, Rich Galen, publisher of Mullings.com and talking head of the Republican persuasion,  and Ted Fishman, author of China, Inc. and Shock of Gray, about our current budget crisis. Click on the links below, take a few minutes to listen and leave your thoughts.

Who caused America’s current budget crisis? with Rich Galen

Has the U.S. debt become a national security issue? with Ted Fishman

Is China a duck or a gorilla, and should Small Business USA care?

The cartoon character Baby Huey is a duck whose gigantic size is so out of proportion to other ducks that, combined with his clumsiness, he often creates chaos wherever he goes. He’s a lovable creature but also, sometimes a problem.

Here in the real world, planet Earth has a kind of Baby Huey – China. Like the duck, in most ways, China is out of proportion to its peers. For example, one out of every five Earthlings is Chinese. Its middle class is the size of the entire U.S. population. China has more gifted students than the U.S. has students and more Internet users than the U.S. has people. And while China’s GDP is about 20% of the U.S. economy, it produces carbon emissions comparable to the U.S. carbon footprint.

With its economy growing at an astounding rate of 9% to 10% annually for some time, much of the chaos China created can be attributed to growing pains. Externally, some of that pain has been visited on China’s global marketplace competitors. But one man’s chaos is another man’s candy: To global consumers, China is more lovable because the low cost, high quality products it typically delivers has increased their standard of living.

The China expert in my Brain Trust is Ted Fishman, author of China, Inc. Based on what Ted has told us in previous visits, this Baby Huey is likely to transform into another kind of animated character, the proverbial 800 pound gorilla (my metaphors, not his). And as the duck morphs into the ape, Ted predicts the day will come when China will not just influence global trade, it will establish the rules.

Recently, Ted joined me again on my small business radio program, The Small Business Advocate Show, to talk about how China is doing in the global recession. One of the things he reported was that, as a result of the economic slowdown, “tens of thousands of Chinese manufacturing plants have closed and millions of workers have been laid off.”

We may soon find out whether China is an infantile, overweight duck whimpering with a stomachache, or a gorilla with a dangerous condition that puts itself and others in peril. Don’t miss this opportunity to hear this China expert share his thoughts on this important issue. And, as always, be sure to leave a comment.

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