Getting Our Priorities Straight: Defaulting is Not an Option
October 11, 2013
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It's taken three weeks for President Obama and Congress to finally sit down at the table and begin negotiations over how to end the Federal government shutdown and prevent default. It's about time.
It's one thing to have a political showdown in Washington, but it's another to affect the lives of countless federal employees who aren't getting paychecks due to the dysfunction of our elected officials. Or to hamstring the many, many small businesses awaiting action from the Small Business Administration ("SBA"), who've been forced to suspend operations until the agency reopens. Or to handicap the untold others who will go without social security checks, veterans benefits, tax refunds or other essential support - all of which is in danger of not being processed on November 1 if the shutdown continues.
I will sidestep debating the politics of debt ceilings and Obamacare, and I'm certainly no expert on the workings of the Federal government, but I do know how to run a business. I've been Managing Partner of Marcum since 1990, and I've always believed in paying our bills on time, if not sooner.
We've always maintained a clear priority order for meeting our obligations. Employees get paid first; next come our vendors; and last on the list are our partners. Everyone else gets paid before partners get their pay checks. And believe me, there were times in our history, when we were a much smaller company, that our partners did, in fact, miss some pay checks, mostly because we weren't collecting fees fast enough from our clients. But our employees always got paid on time, as did our vendors. We did what we had to do to make sure those who depended on us were not let down. Whether we borrowed money or actually put money back into our business, we never defaulted on an obligation.
It's time for President Obama to make the same commitment. He needs to take all appropriate steps posthaste to reassure the global financial markets, our creditors, and others relying and depending on the U.S. government that we will pay our bills on time, when expected. I have to believe that the President has some kind of emergency executive decision-making power (such as mobilizing when the country is in imminent danger) to make sure the United States of America never, ever falls short of meeting its obligations. And it's time to get the Federal government up and running again, irrespective of what Congress does or doesn't do about increasing the debt ceiling. So far, the fall out hasn't been that bad, but if it continues, we all will start feeling some kind of pain.
Hey, if push comes to shove and the federal government needs to borrow money, I'm sure Warren Buffet can come up with some kind of "bridge loan." Buffet has stepped in before as an opportunistic lender of last resort, as he did at the height of the financial crisis to bail out the likes of Goldman Sachs, General Electric and others, making a tidy profit for his Berkshire Hathaway shareholders along the way. And if Goldman Sachs could find a way to finance JC Penny to the tune of several billion dollars just a few months ago, maybe Goldman can help our President figure out a way for us to pay our bills.
Defaulting on our obligations will have a long-term devastating impact on our country's credit rating and, maybe more importantly, on the global confidence that the USA is the safest place in the world to invest, period. Our President cannot allow this to happen.
The opinions expressed in this column are solely those of Jeffrey M. Weiner and do not represent those of Marcum LLP, its partners or its employees.
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