Ignorance is not bliss. However, there are too many of us who are ignoring the discussion about a legislative maneuver known as “sequestration.” This is also known by a more descriptive term – “fiscal cliff.”
Unless this is updated, all financial rules and budgeting will come to a halt on December 31, 2012.
Let me tell you about a few of the programs that are at risk. One program is the funding of our military. If we don’t fix the fiscal cliff, our forces will be reduced by 300,000. America would then have the smallest military troop since 1940. That small forced tempted Nazi Germany and Imperial Japan and led to World War II.
Putting troops in the unemployment lines and reducing our ability to defend ourselves may quite easily put us into a serious war with a major opponent.
Bank deposits at risk
Another vital program is the Transaction Account Guarantee. This FDIC program, which is fully paid for by the banking industry, provides insurance for checking accounts. If Congress fails to extend the TAG coverage beyond its Dec. 31 expiration, approximately $1.4 trillion in deposits will become uninsured overnight. This could be devastating to our local communities.
Imagine all the small business owners, households and others having its cash flow at total risk. Abruptly ending this deposit coverage will disproportionately affect minority-owned businesses and their local lenders. Small banks make more than 60 percent of all small business loans and use this coverage to support local lending.
Feeling the pain
Plants, jobs, retirements plans will begin to shrink and many will go away. Many companies will move their headquarters abroad for a more business friendly environment. Every community and household will feel this pain.
If you are on Medicare, the pain will also hit there. The amount of payment going to your doctor will decrease by 30 percent. You are going to be responsible for paying that portion of the bill.
To avoid this calamity, all Congress needs to do is come to agreement, but that hasn’t happen in over a decade. I pray that they snap out of it and start realizing that this nation’s future is on the line. Sometimes I am confident that they will but then I realize that the Senate has been operating without passing a budget in three years.
Failing to write legislation will have global implications. Nations holding our debt, such as China, Japan and Great Britain, will start panicking. Our dollar will start shrinking. Our economic growth will slow to about 1 percent during 2013.
It all sounds very frightening – and it is! If the Senate and House decide to act, they will do it during the appropriately named “lame duck” session after the elections. We should all pray that they do.
Harry Alford is the co-founder, president/CEO of the National Black Chamber of Commerce.