When a CPA alerts an individual or an organization to a problem, it’s usually wise to heed the financial advice. CPAs figure out the meaning of numbers every day and are accustomed to giving guidance on complex financial situations.
Once again, CPAs are informing America that the federal budget numbers tell an alarming story. In an online survey conducted by the AICPA in December, three-quarters of CPAs said immediate action is needed to quell spiraling federal budget deficits. More than half identified deficit reduction as the top economic priority for the United States, ahead of creating jobs (23 percent), tax reform (18 percent) and ensuring the long-term stability of Social Security and Medicare (5 percent).
Concern on the part of CPAs is not just theoretical. The short-term repercussions of our escalating national debt are bad enough, but over the long term the debt could have a crippling impact on the U.S. economy for decades. According to the AICPA’s survey, seven in 10 (73 percent) members believe that if policymakers are unable to reduce the federal debt, those affected most severely will be individuals and families. Another 14 percent said small businesses will be most affected. And a majority of those surveyed said that without serious efforts to reduce the budget deficit, their clients or their companies will likely experience hiring freezes (55 percent), reduced capital spending (53 percent), reduced benefits (52 percent) and job layoffs (52 percent).
Washington needs to take immediate action to avoid these drastic economic consequences. While the American Taxpayer Relief Act resolved a number of the harshest tax increases, it left unresolved the broader spending issues. Combine that with long-term concerns regarding raising the debt ceiling, and the economy could truly suffer. Legislation is in the works that would delay the debt ceiling showdown until May, but this simply prolongs the uncertainty hindering business and financial decisions. It is time for America to meet the challenges head on.
CPAs take their responsibility to protect the public seriously, and the AICPA is committed to promoting fiscal responsibility by raising awareness on how the mounting federal debt threatens our nation’s future. In the video, What’s at Stake? A CPA’s Insights into the Federal Government’s Finances, the AICPA’s immediate past chairman of the board of directors, Greg Anton, discusses how the financial sustainability of our country could be in jeopardy and offers guidance for policymakers and the public on how the U.S. government’s financial statements can be used for greater understanding of the nation’s fiscal health.
The AICPA Board of Directors has also adopted a resolution that underscores the need to put America on a better economic path and expresses its support of two non-partisan efforts, the Campaign to Fix the Debt and the Comeback America Initiative. The AICPA has also signed onto an open letter, sponsored by Campaign to Fix the Debt, joining America’s business leaders in calling on President Obama and Congress to develop a plan for long-term economic growth.
No one expects this to be easy. The fiscal cliff negotiations demonstrated just how difficult it will be to make the kind of fundamental changes and cuts necessary to restore fiscal sanity. It will require a change in culture, a change in mindset and the courage to make unpopular decisions.
Nevertheless, the nation is looking to Washington for balance, compromise and real solutions. The status quo is not an option – the national debt grows by $10 million every minute. These figures are unsustainable, something no one, on either side of the aisle, can dispute. CPAs know it too. The CPA profession has always called on everyone, from individuals to those in government, to exercise good financial habits and sustainable practices. All Americans should make their voices heard on this important issue and push for responsible action.