The recent last minute agreement to raise the debt ceiling was only a temporary solution to our nation's biggest fiscal problem. No one really expected that the United States was going to default on its debt obligations, but the politicians certainly caused something of a world crisis in the financial markets.
While it is hard to say whether it is this administration's fault or the result of the previous administration's policies having to be addressed with an entirely different strategy, the fact remains that our country owes more than 14 trillion dollars.
The number is so big, it is hard to understand. Imagine 14 million attaché cases (18"x12"x4.5") each filled with a million dollars in hundred dollar bills. A trillion dollars would be more than enough to buy all of the homes that were foreclosed in 2007 and 2008. The 14.3 trillion dollars the United States is equivalent to being able to write a $2,000 check to every one of the roughly 7 billion people living on our planet.
Now that you have a clue as to the enormity of our debt, what does that actually mean? What impact does the current debt ceiling deal have on you and me? How does it affect small businesses?
When the powers that be finally came to some sort of agreement, the result was to add 2.4 trillion dollars to our nation's borrowing limit. As part of the deal, promises were made to cut spending by the same $2.4 trillion dollars. It is an attempt to stabilize our debt crisis and still allow the country to function normally and without having to go through a major financial disruption.
There is a price to pay for carrying so much debt. Standard and Poors, the financial rating agency recently downgraded the credit rating of the United States. The unprecedented move does not actually affect our ability to pay debt, but does create a question both at home and abroad about the financial stability of the world's greatest economy.
The Federal Reserve has promised to keep interest rates low over the next several years so not to cause a panic in the business community. While interest rates may go up on all types of consumer and business debt, they are unlikely to spike high enough to bring our slow economic recovery to a sudden halt.
Small businesses may suffer the brunt of the impact as not only may it be harder to borrow money, but the costs of running their businesses may increase. The fact remains that there is great uncertainty in what will be cut and if/when taxes will be raised.
Small businesses that are already struggling can be forced to close if taxes get any higher. The cost to hire an employee will rise. Government programs will be trimmed or completely eliminated. Who knows what will happen with Social Security and Medicare? Without doubt, everyone will be asked to cut back and sacrifice and that will mean additional hardship for the millions of small businesses in our country.