The Debt Dilemma

I was recently traveling in the upper midwest and had the opportunity to meet with some great American food producers and manufacturers from North Dakota all the way over to Michigan. The travel was quite easy up until Chicago. Endless toll booths and traffic congestion were always in order. What struck me the most was the amount the toll booths are charging to use their respective highway. Only 10 years ago, it cost a quarter to use the off ramps and 40 cents to travel the main highway. “Always carry lots of quarters because you had a number of toll booths” I would remind myself. On this trip, the toll fee to exit the main highway is now up to 60 cents and a $1.60 on the main highways. Besides the toll facilities looking refurbished and much larger, the increase in toll fees have resulted in very little improvement to the overall road system in the Chicago area.

It isn’t any secret that Illinois has a major financial deficit. My guess is that hike in toll booth fees and other services are partially due to the state's budget shortfall. It’s progressive and easy to raise. Yet it almost always falls on the consumer to make up the revenue shortfall that the politicians have already spent. And even though, in theory, more money is coming in, it’s usually just enough to service the existing debt. Once a deficit begins to grow to a size that even higher taxes, fees and levies can’t solve, eventually basic services like roads, law enforcement and other basic services suffer. In the end, consumers begin to change their spending habits which in turn creates even less revenues for the state and country treasuries to collect. This applies to individuals all the way up to the Federal Government. The more debt you accumulate, the fewer things you can do to improve your life. Eventually, you have to pay your margin or go into bankruptcy.

So what does this have to do with increase in food prices in our super markets across the country? Standard and Poor's (S&P) said it was cutting the outlook on the US's long-term rating from stable to negative for the first time in 70 years. It was a warning to Congress that we had better start addressing our debt problem. As I have discussed this many times in the past, as the dollar grows weaker and inflation increases, the price of food will rise, which will at first seem like a good thing on the international front. But as inflation takes hold, it will become a very bad thing as your old dollars will not keep up pace with new prices.

You’re seeing that now with food and gas prices! Whether it is an increase in toll roads or food prices, the cost to function day to day becomes more expensive. That initiates a change in behavior which inhibits your activities. In the end, it lowers yours and my standard of living. I’m seeing this on the local and state level. And no matter how much you tax and assess fees on the consumer, it will never be enough to pay off our national debt. You have to cut spending…no mater how painful. This is the consequences of the debt dilemma. And with that, I’ll see you on the road.