Cutting Our Way to a Smaller Future

I'm not generally very interested in lionizing specific companies. But in this piece, David Weidner makes what I think is a very good analogy:

How Apple would solve the debt crisis

NEW YORK (MarketWatch) — Spending is good. Borrowing is better. Washington is doing neither. It’s liquidating.

I’ve been covering Wall Street and corporate America for going on two decades, and if there’s anything I’ve learned it’s that there are really only two kinds of companies: those growing and those shrinking.

The U.S. government today has officially become the latter.

The difference between a growing business like Apple Inc. and a shrinking one such as Eastman Kodak has less to do with spending and revenue and than with psychology. Growing companies go through tough times. They adapt, and they’re poised to strike when conditions are right. They don’t stop innovating.

Defeated companies may be producing steady profits. But they lose their entrepreneurial spirit. They stop looking at the future. They get intimidated. They quit fighting. They look for a sale. They try to buy growth. They play not to lose — and end up losing anyway.

Which of those does Washington sound like?

...Ultimately, what’s happened to our government, lawmakers, elected officials and ourselves is that we’ve have taken on a mind-set of defeat. It doesn’t seem to matter that the business model — taxing for revenue, spending for growth — isn’t broken. After all, it’s working in Germany, Canada, India and China.

We’ve given up on the model because of our debt situation. It’s a problem, and a pressing one. A default or lower credit rating would cause further damage to our credit picture.

But there are really two ways to handle it. We could take a balanced approach of reining in spending and increasing revenue (cutting costs, raising taxes), or we could simply cut, slashing incomes (Medicare, Social Security, the military). These drastic cuts, which will balance annual budgets, are in effect a surrender.

The very basic and (I thought) uncontroversial notion that the government can make useful investments in the nation, that it can do things to help make the economy stronger and more productive, has been thrown out the window in the US recently. And the result, I fear, will be a decidedly smaller, meeker, and poorer future for this country.