The approach of the President of the United States to begin cutting back the trillions of dollars in domestic deficit/ debt at the same time that his Government is seeking to approach the return to economic growth and the long-term development of the human resource of the country is very instructive. The approach demonstrates a clear appreciation of why the deficit was contracted, its accumulation over the last decade, a return to efficiency, while protecting the most vulnerable in the society and, perhaps most importantly, retaining and enhancing pro- grammes for the development of the human resources capability, the real engine of economic growth and development for the future.
President Barack Obama laid out a clear roadmap for the present and immediate future in the statement made a few days after the Democrats and Republicans came together to avoid a shutdown of the Federal Government over budget cuts. The US President cited as reasons for the deficit the massive spending for two wars (Iraq and Afghanistan), spending on a drug prescription programme, and trillions of dollars in tax concessions "that went to every millionaire and billionaire in the country." He said the cuts "will force us to borrow an average of (US)$500 billion every year for the next decade."
For the future, the US President identified four essential approaches to cutting the deficit and returning growth to the economy: Keep domestic spending at low levels by cutting waste; additional cuts to defence spending; a reduction in the cost of healthcare as opposed to making poor families and seniors pay for health services and products; a refusal to further reduce taxes for the "millionaires and billionaires;" and a stated intention to return to further cuts and adjustments in 2014 if the plan is not achieving its stated goal of reducing the deficit by US$4 trillion.
The American population, as is its wont, will certainly engage in lively discussion and debate as preparations for the 2012 budget begins on the blueprint and its details. Our concerns in the Caribbean and the rest of the world will be to have a healthy trading partner to sustain growth in our economies. In addition to general trading, we in the Caribbean depend on Americans taking vacations here, education at US universities for growing thousands of our best young minds, remittances from relatives and friends in the US, grants and assistance for security spending against drug trafficking and gun-running through the Caribbean Sea, work for our artists and entertainers, and a range of other economic activities which prosper when the American economy is firing.
Apart from the substance of the statement is its clarity of thought, its focus on essentials, the eschewing of political rhetoric and grandstanding, the all-inclusive nature of the approach and, perhaps most of all, the determination to take hard decisions where necessary. For instance, it requires courage for a US President facing re-election in 18 months to make a commitment to trim the deficit on defence spending; and this is even if the President quotes his chairman of the Joint Chiefs of Staff, Admiral Mike Mullen, as saying that "the greatest long-term threat to American society is America's debt."
The Government here must come up with a comprehensive plan to move the economy forward. There has to be an accompanying cohesiveness among ministries and their ministers. On such a basis, the Government must seek to negotiate space in the plan with the unions and other social actors rather than give ultimatums. All the actors in this script need to be ready to cooperate in the national interest.