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 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 Denver.

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

Edit ModuleShow Tags

Archive »Related Articles

8z Real Estate offices participate in "Sock it to ‘Em" campaign

Realtors from two 8z Real Estate offices are focusing their holiday philanthropy efforts by collecting socks for Fort Carson soldiers.

Here are my Colorado real estate predictions for 2017

There are a number of wild cards that could drastically alter these predictions, but 2017 is going to be full of volatility (look at the wild swings in treasuries and stocks already) that will no doubt impact Colorado real estate.

A simple mindset change can rock your world

When you change your predominant mindset from a fixed to a growth orientation, everything in your life—and your business—can change.
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: