No matter who is in office, or which party he (or she) belongs to, I always look forward to the State of the Union address. Even though I never got to attend the speech in person, watching it always reminds me of the summer I worked in Washington D.C. as an intern for the House Minority Leader.
My “office” that summer (actually a very small desk in a larger office) was just off the Capitol’s rotunda. I would arrive at 9 AM(-ish) every morning, write one page responses to constituent mail on issues ranging from gun control to NASA, and then continue to perform my duty as an (unpaid) civil servant at cocktail parties and other social events around town. It was a fun time, and it gave me a lot of respect for people who work in government. Politics aside, most of them–including President Obama–are decent human beings trying their best to do right by the country. They don’t always succeed, of course. Many of their policy initiatives are well-intentioned but misguided, which brings me to the tax reform proposals the President spoke about last night. One is a good idea that will only affect a select few. The other is a less-than-good idea that could affect a whole lot of folks.
When I’m scouting dead-companies-walking, I look for a number of factors. Businesses fail for all sorts of reasons, after all. But there are almost always two main symptoms of a company in terminal condition: falling revenues and mounting debt. These twin problems feed one another and create a kind of corporate death spiral. As revenues drop, debts rise. Making matters worse, creditors begin to demand higher and higher interest rates to service that debt, which means that repaying it eats up more and more of a company’s shrinking revenues. Pretty soon, that company can’t meet its obligations and its only option is to declare bankruptcy.
I usually find comparisons between government and business strained. But with a government shutdown looming by midnight tonight and the very real possibility that the U.S. Treasury will renege on its credit obligations becoming more likely every day, Washington D.C. is starting to look like the dysfunctional boardroom of a business fast on its way to insolvency.