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The Wheel Turns

The American culture is weary, its landscape littered with battered campaign signs, bumper stickers and assorted banners. Associated election costs were staggering, as were the depths to which both parties sunk in deceitful ads, elusive debate rhetoric and campaign speeches filled with outright lies and misrepresentations. For most of us, the end could not come fast enough. Thank heaven this event is over and we can get back to work.

I won’t comment on candidates or parties but I am deeply concerned about the election process and its aftermath. For now, let’s just say that the process of electing a president has become onerous, manipulative, and stupidly expensive. I wonder how many citizens even understand what is at stake during these tragicomedies that threaten to obfuscate the challenges before this nation? Regardless of all the folly and expense, the wheel continues to turn and we had better prepare for a bumpy 2013.

The ‘fiscal cliff’ is the nom de jour, generating enormous media attention, as both parties joust for position and desperately try to avoid blame or responsibility…for anything. Taking stock of the best available data and assuming no huge natural disasters (which may be a reckless assumption), 2013 should generate annual GDP growth of around 2% with the possibility of inching toward 2.5% by 1/1/14. Of course, automatic spending cuts dialed into current legislation, if enacted, equal around 5% of GDP, so could deeply wound any recovery. If this calamity is to be avoided Congress must act by mid- December. Even if it does so, and most of the deductions remain in place, several other reductions related to unemployment assistance, government programs and the loss of earmarked projects will dampen GDP growth. Tax reform and spending formulas must be simultaneously addressed if the private sector is to regain even a modicum of trust in the federal government’s ability to manage its affairs. Of course, I didn’t mention entitlements, which are the primary culprits.

Globally, Europe continues to struggle both economically and with cultures that cannot grasp the twin concepts of austerity and bankrupt governments. Riots fomented by those experiencing reduced pensions, longer workdays, and fewer perks are spreading, signaling entrenched societies that ignore decades of decadence, largesse and myopic governance. As noted previously, the plot always turns and, if reasonable, pragmatic people do not emerge to manage Italy, Greece, Spain and France things could quickly turn ugly.

So, with the Middle East in shambles, Europe struggling, China and India slowing, and South American countries sparring, care must be taken to seek strategic positions that will enable the U.S. to reform within a troubled, warming and conflicted global community.

Several indicators point to emerging domestic forces that could encourage steady growth. With around $2 trillion sitting idle in American businesses, there is ample cash to invest in inventories, equipment, facilities and jobs. Reluctance to put those resources in play is tied directly to trust in the federal government. More accurately, it is tied not to government programs, but to Congress, which is earning the lowest marks in American history. Will it do what is necessary to cut spending, retain sensible regulations, and introduce wise tax policies that are forged on a dual platform of practicality and vision? Housing prices are beginning to rise, new construction rose throughout 2012, domestic debt is lower than in decades and savings has increased across the middle class. Consumers are beginning to regain a level of guarded confidence, returning to markets and stores for essentials and more. But will this last? The next 3 to 6 months will tell.

In December, I’ll share predictions for 2013. But know ahead of time that they are neither rosy nor deeply pessimistic. Climate change and violent, high-damage storms seem to be growing to endemic proportions, costing billions without recourse other than thoughtful preparation or relocation. Growing economic inequality will become more of an issue bringing new opportunities for protest and conflict. With proper structure and explanation, taxes can be raised through various mechanisms that allow users to willingly pay a disproportionate share. The Affordable Care Act will be addressed and modifications will begin to forge it into something both palatable and worthwhile. State and local government will become more important and will continue evolving toward service consolidation and centralization, as public administrators accept the role of government as community builder.

The coming year will continue a process of change that will accelerate into 2014 and 2015. America is transforming. Industry is experiencing a resurgence; on-shoring is accelerating; consumers remain active; and people are beginning to find comfort in smaller, more affordable homes, lower debt, and reborn neighborhoods.  Where is your community in this continuum? Is it leading, following or ignoring the signs?

JFL Pic Blue Shirt-Yellow TieWith over three decades working in and with federal, state and local government, John Luthy understands public agencies.  Known for his real world, straight talking style, he is a leading futurist specializing in city, county, state, and federal long-range thinking and planning. John is the author of Operations Planning: A Guide for Public Officials and Managers in Troubled Times, and The Strategic Planning Guide, both published by the International City/ County Management Association (ICMA). Edition two of his book, Planning the Future – A Guide to Strategic Thinking and Planning for Elected Officials, Public Administrators and Community Leaders, will be released in spring 2013. An innovative and dynamic presenter, John is frequently asked to speak and consult on how to prepare public organizations and communities for emerging challenges (public futures at http://www.futurescorp.com).

One Response

  1. What is the disapproval rating for Congress? How about 100%?

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