A Novel way of looking at Budget Talks

By Zachary Alexander on

If you listen to cable news, you know CEOs cannot run budget deficits forever. However, they often have to deal with the revenue versus profit dilemma. For example, media companies run deficits in their print businesses while growing profits in their digital businesses. Common sense would say jettison the print business. The problem is that the print business represents the majority of revenue and holds a substantial amount of shareholder value.

A lot of very serious people like to compare President Barack Obama to CEO’s of public companies when it comes to budget deficits. And they like to compare the budget deficits to the bottom line on a balance sheet. Unfortunately, confounders on cable news channels fail to talk about how and why sovereign governments differ from companies, which are setup only to benefit shareholders not the generally public.

For those tasked with supporting sustainability, you may want to consider the relationship between jobs and deficit spending when listening to discussion of the budget talks. In a distressed economy, the jobs numbers are like revenue in the revenue versus profit dilemma. The monthly jobs number is seen as measure of the health for the United States Economy just like the revenue number for public companies.

What this means is that the budget deficit is not an absolute number. It is a number that must be balanced by the jobs number with the understanding that maintaining a healthy top line is just as important as growing the bottom line. Over emphasis on the bottom line by CEO’s of public companies is just as detrimental to the overall health and welfare of the company as spending more than the company makes each month.

Zachary Alexander