Promises must be kept to restore America's economy
Both of us run companies that are based right here in the Keystone State.
SunGard is a Fortune 500 company with more than 17,000 employees worldwide. The company provides software and processing solutions for financial services, K-12 education and the public sector, as well as integrated disaster recovery, managed services, IT consulting and business continuity management software.
The Keller Financial Group, a small financial services firm, has seven employees. Regardless of the differences between the companies we lead, what's best for both of our organizations is the same: short- and long-term policy certainty and economic stability.
During President Obama's State of the Union address, we heard about the State of the Debt — and as we already knew, it isn't strong. We were encouraged that the president used this opportunity to maintain that we "need to finish the job" when it comes to deficit reduction. And we are pleased that Sen. Marco Rubio took advantage of his rebuttal to the president by offering ideas on the needed steps toward debt reduction.
However, speaking about our fiscal problems and actually taking substantive action to solve them are two entirely different things. It is now up to members of Congress and the president to follow through on their promises to begin restoring the nation's economic footing.
Simply put, for the sake of all businesses, large and small, and employees like ours, there are two things our elected leaders in Washington must do: They must stop lurching from one self-imposed fiscal crisis to the next, and they must start controlling our national debt.
Our elected leaders continue to manufacture crises and then make deals that do just enough to avert them. First was the "fiscal cliff." While we didn't tumble off it, that was a crisis averted only because our leaders agreed to some new tax revenue.
The next crisis was over the debt ceiling. We managed not to exceed our nation's borrowing authority only because our leaders agreed to waive the ceiling for three months.
We cannot repeatedly delay or ignore the tough decisions that must be made in order to tackle the true drivers of our fiscal problems.
In the next few months, our elected leaders will need to address the delayed, nearly across-the-board "sequestration" spending cuts — which were postponed until March 1 by the fiscal cliff deal — as well as the expiration of the laws that keep the government running (that's on March 27) and the debt ceiling yet again in May.
Not taking action in advance of any one of these deadlines would be bad for businesses of all sizes. Sudden, poorly thought-out government budget cuts would disrupt the hiring and investing plans of businesses that may lose the government as a customer or lose clients who may have to cut back their own spending without warning. A government shutdown or a default on the nation's credit would be even worse.
However, none of these possibilities would be as bad for businesses and our economy as a whole as would simply extending these deadlines indefinitely and not paying attention to the problems associated with the unsustainable long-term trajectory of our debt.
And it is unsustainable. Relative to the size of the economy, our national debt is larger than at any time since the period immediately following World War II. Currently, the debt is 73 percent of GDP. But unless Congress and the president make some changes to our planned revenues and expenditures, it could reach 100 percent within 10 years and 200 percent within 25.
Eventually, our rising debt could hike up interest rates, inflation rates and unemployment rates. Borrowing for businesses and individuals would get more expensive, and we could find ourselves in a full-fledged debt crisis.
One way of ensuring we avoid further long-term economic damage is through fundamental tax reform — a new code that will take a good, hard look at the nearly $1 trillion a year the federal government loses in deductions, exemptions and loopholes in order to more efficiently and effectively raise revenue for our government.
We must also structurally reform our entitlement programs in order to bring down future costs and increase efficiency while ensuring they will remain in place for the most vulnerable among us.
President Obama's address and Sen. Rubio's response give us reason to be optimistic about what lies ahead. But whether immediate steps toward debt reduction are taken or not, we — as supporters of the Campaign to Fix the Debt, a national, bipartisan organization dedicated to fixing the trajectory of our debt — will continue pushing our leaders for comprehensive reform that will put our fiscal future back on track. We urge you to join us at FixTheDebt.org.
Russell Fradin is president and CEO of SunGard, based in Wayne. Dwayne Keller is president of the Keller Financial Group, based in Mechanicsburg.