Small business owners can breathe just a bit easier now that nationalization of healthcare is on hold. Also, Cap and Trade and its crippling taxes seems to be frozen in its tracks due to a very cold winter combined with mounting reports of faulty evidence for global warming.
But even with these two budget busters off the table for now, the last four years of Bush and the first year of Obama have left the country with crippling debt due to massive government spending.
Senator Brownback highlights the impact in a recent op-ed in National Review:
The best case scenario of excessive federal debt is a wet blanket thrown over any hopes of economic growth and a recovery from the recession any time soon. As this paper from the American Economic Review Papers and Proceedings explains, 90% is a threshold for this ratio above which growth in GDP, that is a recovery, is difficult at best.
Small business growth is at the heart of any recovery, so this means that small businesses will not see a significant recovery unless we get debt under control by massive federal spending cuts.
And the worst case? Keep in mind that China is the main creditor for much of this debt, and as I wrote recently, they have their own problems right now. Should they balk at funding more of our debt, or worse yet be unable to due to their own economic collapse, prepare for a host of really bad economic outcomes. Outcomes such as hyperinflation and currency collapse could push us into an economic downturn that would make the last two years seem like a pleasant memory.
Small businesses are already fragile due to two years of hunkering down. Expect massive small business failure if this scenario comes to pass.
But even with these two budget busters off the table for now, the last four years of Bush and the first year of Obama have left the country with crippling debt due to massive government spending.
Senator Brownback highlights the impact in a recent op-ed in National Review:
After the recent binge of federal spending, our nation's gross debt is scheduled to surpass 90 percent of GDP this year, and to approach 100 percent of GDP by the end of the decade. And this does not even include Democratic plans to establish a massive new health-care entitlement and impose costly new energy mandates on business. If all of these agenda items are accomplished, it is a safe bet that the national debt will surpass 100 percent of GDP within the next decade.So why should entrepreneurs worry about statistics such as debt as a percent of GDP?
The best case scenario of excessive federal debt is a wet blanket thrown over any hopes of economic growth and a recovery from the recession any time soon. As this paper from the American Economic Review Papers and Proceedings explains, 90% is a threshold for this ratio above which growth in GDP, that is a recovery, is difficult at best.
Small business growth is at the heart of any recovery, so this means that small businesses will not see a significant recovery unless we get debt under control by massive federal spending cuts.
And the worst case? Keep in mind that China is the main creditor for much of this debt, and as I wrote recently, they have their own problems right now. Should they balk at funding more of our debt, or worse yet be unable to due to their own economic collapse, prepare for a host of really bad economic outcomes. Outcomes such as hyperinflation and currency collapse could push us into an economic downturn that would make the last two years seem like a pleasant memory.
Small businesses are already fragile due to two years of hunkering down. Expect massive small business failure if this scenario comes to pass.
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