Friday, November 07, 2008

Forgive Us Our Debts: The Chief Sacrifice Obama Must Ask? Live Within Our Means!

Houston Chronicle business columnist Loren Steffy noted today how much Barack Obama emphasized the need for sacrifice in his victory speech election night. Steffy says the biggest sacrifice needed, nationally and from each household, is to break out of the "borrow-and-spend" pattern that has been so popular for the last decade. It is especially good to hear this from an experienced business analyst. Several of Steffy's paragraphs follow.

One word, nestled amid the eloquence of Barack Obama’s victory speech, lingered long after the cheers subsided.


It’s a word too long absent from the political discourse, one that speaks to the change that Obama claims his presidency will represent.

We cannot fix our finances without it. We can’t address our foreign oil dependence without it. We can’t repair our broken health care system without it.

We can’t simply shop our way through the crisis, and we can no longer afford to delude ourselves into thinking we can.

The Obama presidency faces the worst stock, bond and commodity markets in three decades. Even strong performers such as oil companies are now facing the prospect of weaker earnings because of lower commodity prices.

No stimulus, no bailout, no amount of hope and soaring rhetoric can succeed if it’s not accompanied by fiscal responsibility.

At some point, higher taxes are inevitable to bring the deficit back in line, and Obama’s plan to limit the increases to the rich aren’t likely to be enough.

That is the sort of sacrifice we must make to resolve the crisis.

We must make sacrifices at the personal level, too, by reducing our use of credit and curtailing our spending, building our savings so that we are better prepared.

This is a crisis spawned, in large part, by our own delusion.

We wanted to believe in ever-rising stocks, in a shop-till-the-terrorists-are-defeated foreign policy and homes that were worth whatever our mortgage broker told us.

For eight years, our government borrowed to pay for wars, tax cuts and prescription drugs, while we borrowed to pay for HDTVs, iPhones and Xboxes. Buy now, pay later wasn’t just a sales pitch, it was fiscal policy.

Later is now. To fix our economy we first must change our views of debt and savings.

That will take sacrifice, the one word from the president-elect’s speech that we must hear before all others.

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