Edit ModuleShow Tags

The looming fiscal cliff


Published:

We keep hearing about the “fiscal cliff” and its impact on our nation’s and Colorado’s economy. Last month, David Walker, former United States Comptroller General, was here to talk about it at an event we hosted with Colorado Concern and the Colorado Society of CPAs.

What we learned was stunning.

In 1912, federal spending was 2 percent of the United States total gross domestic product. Today it is nearly 25 percent of the total GDP. In addition, about 67 percent of the spending at the federal level is on autopilot—driven by mandates and statutory requirements. We know this issue well, because most of Colorado’s state budget (about 75 percent) is driven by constitutional or legal requirements. That means, in hard times, cutting spending is incredibly difficult because you either have to change federal laws, state laws or the constitution (which requires a vote of the people) to balance the budget.

Even with these compelling facts, context can sometimes shed more light on our financial situation. If you compare the U.S. debt to other foreign nations, and you use the International Monetary Fund’s parameters, only Greece is in a worse debt situation than the United States. Uff da!! (As my grandmother would say.)

It’s the revenue side of the equation that really highlights why we have a debt issue. The federal government collects 18 percent of the total revenue of the United States—but, remember, it accounts for almost 25 percent of the entire amount spent. That’s about a third short of the revenue needed to cover the feds’ expenditures, or for every three things we buy, we can only afford two of them. We can’t fix this situation by simply raising revenue (i.e., taxes) nor can we cut spending enough to solve this issue (because 67 percent of that federal spending is accounted for before it is even collected). We are going to have to make some very tough decisions and be tremendously thoughtful about how we manage this problem from both sides of the fiscal fence.

We believe every sector of our economy will have to do its part to help deliver the best solution for Colorado and the country. As long as politics and rhetoric prevail, we will never get to the right answer. The Chamber is committed to helping find the right solution to address our debt and drive our economy.

Edit Module
Kelly Brough

Kelly J. Brough is the current president and CEO of the Denver Metro Chamber of Commerce. She previously served as the chief of staff and deputy chief of staff for Denver Mayor John Hickenlooper. She also served as a personnel analyst and a legislative analyst for the City and County of Denver. Kelly has served on a number of boards and commissions, including the Denver Metro Chamber Leadership Foundation board. She has a bachelor's degree in sociology and criminal justice from Montana State University and an MBA from the University of Colorado at Denver.

Get more of our current issue | Subscribe to the magazine | Get our Free e-newsletter

Edit ModuleShow Tags

Archive »Related Articles

Why your email security is your financial security

Cyber criminals constantly find new and ingenious ways to exploit email. Once an email account is compromised, the thief can fraudulently gain access to corporate or consumer cash.

Verizon increases peak mobile speeds in Denver and other cities by 50 percent

Verizon has launched LTE Advanced technology to bring 50 percent faster peak wireless data speeds to more than 288 million people in 461 cities from coast to coast, including Devner.

JLL secures space for CommercialTribe in the heart of LoDo

JLL has secured a prime location for CommercialTribe in Denver’s LoDo neighborhood in a space formerly occupied by an oil and gas firm.
Edit ModuleShow Tags

Thanks for contributing to our community-- please keep your comments in good taste and appropriate for our business professional readers.

Add your comment: