A Couple of Debt Thoughts

I thought this was a really good point made by John Mauldin [who, as a side note, is from Texas and a Republican].

"As we bring government spending down, unless it is accompanied by private-sector growth, we will see overall real GDP shrink. That is just the how it works. Now, the smaller government expenditures and deficit will mean more money for private-sector investment and productivity growth, but the process of simply getting the deficit under control is going to mean slower growth. Wrap your head around that. While Republicans (including me) want to control Congress and the presidency in 2012, the policy choices made in 2013 will not be met with a robust return to 4% growth and immediate jumps in employment levels. It is going to take a lot of education to convince voters that there is no magic in spending cuts (or even tax increases) and that we will need to stay the course, even while there is a general malaise in the economy. My advice to my fellow Republicans? Do not sell the concept that voting Republican will provide a quick fix. It will get you slaughtered in 2014."

I think the real key is for the Republicans is to communicate the above very clearly in their campaigns. I don't have much hope for their ability to do that given their exceptionaly poor communication skills in the last two elections (and right now for that matter), but maybe more of the voters at least understand this than last election... maybe... hopefully...please? The way I see it, the solutions that need to be implemented are going to take a while and we will have to stick to the plan, even though it will hurt. If we decide, prematurely, that we would rather kick the can down the road then it is going to hurt all that much worse the next time we are almost forced to get our finances in order.


I also thought, given all the problems going on economically worldwide, that the following link to an article by Diane Swonk of Mesirow Financial is a great, down to earth, explanation of all of the pitfalls out there and how this all could play out. Obviously the U.S. debt and policy decisions made because of it are at the center of most of the problems. Click Here for the link.