For months we've known that our debt ceiling will be reached on August 2nd. And yet here we are a week beforehand and there's still no agreement. Hey -- no big deal. Business owners are cool with that. In fact, many of us are paying more attention to the Major League trade deadline than what's going on in D.C. So you guys just keep haggling and pointing fingers and throwing tantrums.
In fact, not reaching an agreement on the debt ceiling could really be a good thing for my small business. Don't believe me? Here are nine reasons why.
1. A shutdown of government services.
If the bills can't be paid, then the government will shut down. I'm sure our leaders will find some money somewhere to fund the military, so I'm not going to worry too much about being invaded by Canada. But here's the good news: other services could be affected. Services that, to most business owners like me, are really just more of an annoyance. Like the postal service. I could use a few days off from getting bills (and another float day before my check arrives at a vendor). Shutting down immigration and park services wouldn't be such a bad thing either. I live in Philadelphia and there are just too many darn tourists walking around town nowadays, clogging up the streets. Yes, I admit that many small businesses will be affected because they rely on the work provided through contracts with the government. But c'mon guys: like you were really going to get paid on time anyway? You know another 30 or 60 days waiting for a check is par for the course when dealing with the government. Stop your griping already.
2. It will be more difficult to borrow.
Good! Now the U.S. government will know exactly how I feel when I go to my bank for a business loan and have to explain why it's denied because I paid a supplier bill two days late back in 1997. And maybe potential lenders to the U.S. should pay more scrutiny to our country's financial statements. Just like my banker Ed does every time he reviews my balance sheet (Ed, I can see you rolling your eyes). A little humility never hurt anyone. And so what if, because of the U.S. inability to borrow, the reverberations are felt through our entire banking system? It'll be forced discipline, and my business could use the discipline. My corporate credit card balances (particularly after buying those U2 tickets....hint: overrated and too expensive) are already high enough.
3. Interest rates will go up.
If there's no agreement then we can expect an increase in the interest rates we pay on everything. That's because a lower credit rating will cause potential lenders to our government to take more risk, and therefore require more reward. Those rate increases will then trickle down to both consumers and businesses. I see that as an opportunity. I can go back to those customers who've owed me money for the past few weeks and raise my prices. Hey... maybe Netflix was really on to something! And maybe, just maybe, higher interest rates mean I can start earning more than the .0005% annual interest that I'm now getting on my savings account, allowing me to afford a few of the finer things in life. Honey, get your pocketbook: we're going to Pizza Hut... in six months. And wait... the potential for higher interest rates may spur some of my customers to buy the capital items my company sells so they can lock in their financing now. Ka-ching.
4. The value of our dollar will go down.
Hey, no problem there. First of all, I'm planning a trip to Europe this summer with my family and everything's already been purchased in advance. So who's looking like a genius now, huh? I'm hoping that if the dollar plummets, U.S. goods will be cheaper to buy and the French and Italians will make larger investments in American soap and deodorant products before we arrive there in August. Just hoping. And OK, I realize that this will make it more expensive for U.S. firms to buy stuff overseas but whatever happened to making stuff right here in the good 'ol U.S-of-A, right?
5. Our deficits will go up.
Defaulting on our debt will ultimately increase the deficit even more, due to higher interest rates and no real plan to pay it down. As my kids say... whatever. So let them say that. Because kids today are having way too much fun, what with their Xboxes, YouTube and Rebecca Black downloads. I say let that deficit go up and let's give those kids a dose of reality. It's the least we can do! It's all about growing up, right? How can we possibly teach our kids about responsibilities if we leave everything for them nice and tidy? If I pass my business down to my kids I can take comfort in knowing that they won't be able to slack off like they do now. There'll be way too much taxes for them to pay. The Roman poet Horace once said "Life grants nothing to us mortals without hard work." Now there's a guy who would agree with me!
6. We'll probably face more taxes.
I know the Republicans are fighting the fight, but let's face it: a debt reduction deal will probably result in more taxes. Some, like those making more than $200,000 per year, will see their rates go up. And there'll probably be limitations to deductions and the closing of tax loopholes. Those evil rich guys will pay. Like the guy I know whose daughter plays with my daughter. He's an evil rich guy, what with his 7AM - 11PM job running a small bookkeeping business and that lavish 2 bedroom house located near the public school that our kids attend. I see him tooting around town in his fancy-schmancy Honda and taking those luxurious junkets to Ocean City, New Jersey. Him and his cable TV and broadband internet access. How are we letting this guy only get away with paying 40% of his income to the Federal, State and local authorities? It's a travesty and should be stopped now. Thank God this debt ceiling issue hit the fan. Now we can REALLY go after those fat cats.
7. There'll be big cuts in government expenditures.
If a debt ceiling deal is reached, there may be significant cuts in defense, education, energy and other government programs. Which means that the thousands of small businesses that provide services to these areas will be affected. But it's a big world. I hear China's increasing their military expenditures and Iran's going nuclear. So there'll be plenty of opportunities for guys like me to sell our wares there. Education? Over-rated. And as far as the businesses that get government funding for doing research and selling products to these industries like solar power and life-saving drugs and replacing century old bridges they'll just have to find customers somewhere else. Who needs this stuff anyway? This debt ceiling debate has finally brought some sanity to this world.
8. Benefits will be reduced.
Another thing that could happen with a debt ceiling deal is less money for social security and Medicare. This would come through limiting payments and raising the age of people who are eligible for benefits. And why not, right? Retirement is for wimps. I want my employees to work as long as they possibly can. And besides that, I'm sick of getting stuck behind those octogenarians driving at 24 MPH. They should be at work, not on the roads. This could be a windfall of cheap, senior citizen labor opportunities for small businesses. Frankly, we should not only increase the age for receiving benefits we should require them to work weekends. That way I can get a tee time at 9AM or won't have to wait in line for a breakfast special at Denny's on a Saturday morning.
9. There may be a collapse in the stock market.
What, this is a bad thing? No way! We all know that the stock market goes up and down on just the slightest of rumors. And some experts are predicting as much as a 30% drop in stock indexes if there's a debt default. To me, that's a perfect opportunity. That way I can liquidate my entire business and buy as much IBM stock as possible while it's at a low. It's IBM for God's sake... of course it'll go back up again. And I'll probably make way more money than I'm making running my little small business nowadays in this ridiculous, stupid, frustrating and difficult economic environment. As Randolph Duke said in Trading Places: "Sell! Sell! Sell!"
See what I mean? It's not all that bad. Now I know why our leaders have been procrastinating so long. They probably realize that not raising the debt ceiling could really be a good thing for the country. It may certainly be for my own small business.
Gene Marks writes weekly online blogs for both The New York Times and Forbes and bi-weekly for American City Business Journals. He runs a ten person consulting firm outside of Philadelphia and can be followed on Twitter.
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