Navigating the Debt Ceiling Dilemma: A Page from the Startup Playbook

The U.S. government, on the other hand, consistently spends more money than it makes because of its ability to control the currency. As a result, we inevitably approach the borrowing limits set by Congress on a periodic basis. Technically, if the limit is not raised in time, our country goes into default and we no longer pay our bills. The fear of major negative global economic repercussions leads to seemingly never-ending debt ceiling increases.

Although it can feel like debt ceiling debates are just about political positioning with no real-life ramifications for the rest of us, I believe it’s time to shift our mindset. It does affect us. It does have consequences, and it’s time for us to face that reality. Unless we make some significant changes as a country, our massive national debt will catch up with all of us.

While the Goals of the Government and Start-Ups Are Similar, the Way the Money Works is Different

As I hear more about the debt ceiling, I thought about the similarities and differences between the government’s challenges compared with those of startups. With startups there is always a question of whether to raise money to accelerate growth or to keep expenses low and grow steadily. However, cost cutting only works so much – it’s impossible to cut your way back to growth. For many of today’s businesses, innovation is the key to long-term growth and success which often means additional investments. Yet, I think that sometimes leads to the gambler's fallacy: if you’ve been on a losing streak, surely you have a better chance of success on the next flip of the coin, so why not try one more time?

I think that’s a bit of what’s happening for the U.S. as a country as well. I’ve talked a great deal about the federal government’s investments in U.S. manufacturing over the past several weeks. We, as an industry, are the recipient of trillions of dollars spent as part of the Infrastructure Bill and the CHIPS and Science Act – spending that has significantly contributed to our country’s approach toward the debt ceiling.

By providing stimulus money, the federal government is trying to position our country for long-term growth, shore up our domestic supply chain, and fuel innovation that will be critical for economic success in the long run. The problem is that innovation and investment can be addictive – we spend more and more until we find ourselves in the current scenario.

In the private sector, start-ups can only spend so much. If they abuse the balance between prudent spending and investment, they end up bankrupt. The federal government is the only "business" that doesn't risk bankruptcy because of its ability to create more money and continue to legislate things like an increase in the debt ceiling. Instead, the risk is further inflation, devaluing of the U.S. dollar and consumer panic, which all have broader economic implications. 

It’s Time to Apply Some Start-Ups Lessons to Government Spending Before It’s Too Late

Since the public and private sectors function so differently, I realize that it’s a huge ask for the federal government to act more like an entity in a free marketplace. Yet, I don’t believe we can continue on the path that we’ve taken for so many years indefinitely. Uncontrolled spending, regardless of good intentions, is simply not sustainable.

Just like start-ups don’t have the luxury of creating funds when they are needed or accumulating an unlimited amount of debt, it’s not a long-term solution for our country either. 

We need to start in the present moment. Right now, the money has already been spent, and we really have no choice but to increase the debt ceiling. Moving forward, however, we need to achieve better fiscal balance. We need to make the difficult decisions of cutting expenses and reducing future spending. Yet, we must find ways to continue to innovate for future growth as well. Choosing the right investments will be key.

Recent Investments Mean Some of This Burden Falls on Manufacturers

As I mentioned previously, trillions of government dollars that have been spent recently have been channeled to the manufacturing industry. That means, we now have a great responsibility to the future of our country to use that money wisely.

We must remember that the United States has taken on more debt in order to fuel the  Infrastructure Bill and the CHIPS and Science Act, and it’s now up to us to innovate and generate a return on investment for not only our private companies but for our country.

A few innovations that hold particular promise in helping to revitalize manufacturing as an industry and the United States as a country include:

• Industrial Automation. For years, manufacturing facilities have been automating processes and production lines. Robotics and advanced automation technologies will continue to allow our industry to do more with fewer resources.

• 3D Printing. Shortening the timeframe from concept to production is key to rapid innovation. Additive manufacturing technologies such as 3D printing can help facilitate that speed.

• Artificial Intelligence. AI, machine learning, and now generative AI are all being developed at lightning speed. This level of learning holds a great deal of promise when it comes to rapid innovation and development of those ideas into solutions.

Conclusion

It’s easy to sit back and tune out all the debt ceiling talks and negotiations and believe it's simply not relevant to our day-to-day lives. Yet, the reality is that each and every one of us needs to care about how our country is spending money and understand the potentially dire long-term consequences if we do not make some changes.

As an industry, manufacturing has a special responsibility as it’s been a key recipient of a trillions of dollars in recent spending. What we do with the investment our country has made in us may have a significant impact on future spending and the trajectory of our nation.