In my 40-plus years as a venture capitalist I have come to appreciate the certainty a healthy economy provides for businesses both large and small. It's actually a pretty basic concept: when businesses feel secure and confident they are more likely to grow, hire, and invest. Conversely, when the economy is unstable businesses often become much more risk averse, and in many cases they're forced to make undesirable cuts that affect their bottom line.
I'm afraid the country is currently experiencing one of those dreaded periods of uncertainty -- uncertainty that is driven by the country's menacing national debt. Our national debt poses a threat to all Americans and is particularly troublesome both for well established businesses and for those seeking to enter into the marketplace. In order to restore the certainty that fuels economic growth and ingenuity, we must take steps to stabilize and reduce the debt as a share of the economy.
As someone who understands what's needed for entrepreneurs and start-up companies to succeed, I can tell you there is nothing more integral to their success than operating in a stable financial system. Unfortunately, the recent environment in which they've had to function has been less than ideal to say the least. When our leaders run the country in a manner that is fiscally irresponsible -- where excessive debt limits the potential of the private sector -- everyone suffers.
Rising debt levels are expected to cause interest rates to increase from about 2 percent today to roughly 5.2 percent later this decade, according to the Congressional Budget Office (CBO). This means it's more difficult for smaller companies and those that fund them -- such as venture capitalists -- to access affordable credit needed to foster growing businesses. It would be shameful if restrictive economic conditions deterred someone with a profound new idea -- a medical breakthrough or technological advancement -- from sharing that innovation with the world.
A recent report from the CBO should serve as a red flag for future generations of entrepreneurs and is proof that our debt is on an unsustainable path. While we already knew that debt is higher than it has been in the last sixty years, the CBO's most recent projections show debt as a percentage of GDP being on course to reach 79 percent by 2023, exceed 100 percent in the early 2030s, and hit ever-increasing levels thereafter. These numbers paint a picture of America being consumed by its debt burden in the not-so-distant future should we fail to reverse these ominous trends.
Throughout the past several months Washington has made a habit out of reeling from one manufactured crisis to the next. Whether it was the "fiscal cliff" or budget "sequestration," lawmakers cannot seem to make the tough decisions that address the real drivers of our debt problem -- the growing costs of our entitlement programs and our inefficient tax code. Until we begin substantive discussions aimed at meaningful reform in these two key areas the country will be stalled in a perpetual state of fiscal unease, holding our collective breath every few months for the crisis du jour.
Fortunately, there has been some progress on this front in the past few weeks. With the President reaching out to Members of Congress in an attempt to open up a dialogue on this issue, there is a new window of opportunity for a "grand bargain" on a comprehensive debt deal. Also, both chambers of Congress have introduced budget resolutions that put the debt on a downward path relative to the economy this decade -- a major step forward in this process. And possibly most notable, Congress managed to avoid a government shutdown by passing the continuing resolution to keep the government funded for the next six months. While all of these are positive developments, there is still a great deal of work to be done.
Politicians will not be able to do this on their own. If we've learned anything from the circular debates regarding fiscal policy from Washington in the past few years it would be that the status quo is becoming increasingly ineffective. If we are to solve this problem Americans need to exert pressure on those in power and convey to them the need for bold leadership on these divisive issues. Coming to that realization is why I have lent my support to the Campaign to Fix the Debt, an entity capable of facilitating such efforts. The Campaign has mobilized key figures from business and policy committed to restoring order to the nation's fiscal house by giving the President and Members of Congress the support needed to make difficult and often unpopular decisions that will result in a stronger, more nimble economy.
I am confident we can overcome these challenges because we are a country of leaders and problem solvers. And we cannot risk the serious long-term economic damage that will result from continued inaction. So, please join us as we fix the debt.
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