"BANKRUPTCY 1995: THE COMING COLLAPSE OF AMER. & HOW TO STOP IT"   Term Paper ID:20164 Click to get this paper

Essay Subject: (Harry E. Figgie Jr. & Gerald J. Swanson). Critical review of work on dire effects of the deficit.... More...

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Paper Abstract: (Harry E. Figgie Jr. & Gerald J. Swanson). Critical review of work on dire effects of the deficit. Paper Introduction: Harry E. Figgie Jr. in his book Bankruptcy 1995: The Coming Collapse of America and How to Stop It (written with Gerald J. Swanson) presents a nightmare scenario of the next three years, holding that by 1995 America will have spent its way into bankruptcy. His belief is based on a view of the national deficit, its origins, and the rate at which we are adding to it. This is a timely issue that has been argued from all perspectives in recent years, with many Americans fearing the effect of the deficit while others believe it is not the catastrophe that it has been made out to be. Figgie's timetable is probably the most arguable point in his book, since it seems to be a relatively short period of time that he is giving us to completely bankrupt ourselves if no changes in national policy are made. He is not one of the doomsayers who believe that we have already passed the Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. He has indeed been a crusader for gettingbetter control of the federal budget and for doing something concrete aboutthe deficit before it buries us all, and he has produced a number ofprograms to do something about the matter, such as the Gramm-Rudman-Hollings balanced-budget law of 1985. In three years, we will know for certain. He says that the politicians haveaccomplished this by running up a debt that the country can never repay andthat it will soon be beyond any amount we can even think of repaying. Figgie notes a number of earlywarning signs which show that a problem is developing in the way he says itwill develop, one of which is that the political leaders are doing nothingabout the deficit. He saysthat personal savings will be eviscerated by inflation. in his book Bankruptcy 1995: The Coming Collapseof America and How to Stop It (written with Gerald J. He says that the American dollar will fall to a pointof being inconsequential on the world market. Figgie makes the point of his entire discussion clear at the outsetwith a blunt statement of what will happen if nothing is done: "In 1995,the United States of America, as we know it today, will cease to exist.That year, the country will have spent itself into a bankruptcy from whichthere will be no return" (1). He also calls on theneed to create reforms for after the war has made a dent in the deficit.The raising of taxes is prohibited in Figgie's scheme, as are a number ofother measures that have been considered at various times. Havingdetermined that there was a problem, Figgie commissioned a number of peoplein a research team to travel extensively to study the effects of such adeficit and to decide what this would mean for the economic and businessenvironment. Figgie notes that economists differ, and he believes that those whocan show that the deficit does not matter are simply wrong. Figgie doesprovide an example in the form of Austria after World War I, but given therapidity of change today, even this is too far back to make a really goodcomparison. The author is the founder and chairman ofFiggie International, a diversified corporation in Cleveland, Ohio. Figgie clearly wants us to believethat these warning signs are prevailing now and that the end is near. It is morecertain that he makes us think about the possible consequences--whetherthey are likely or not is the point under discussion. All manner of funds woulddisappear, including such supposedly safe pools as Social Security andcompany pension funds. He also says that he may beunderstanding the degree of the problem. It is not clear why wecannot stop borrowing and support ourselves as he says we can do withoutthe sort of dislocation he sees as necessary. The reason for this is that our leaders have beenbleeding the country to death: "In the seventeen years since 1975, theyhave sucked the lifeblood out of the nation and put the country in hock forcash to cover up their unwillingness to tell us the truth" (23). He used thesefigures to graphically examine the issue and found that by 1995 theAmerican national debt will have grown beyond our ability to control itthrough taxation: "In other words, even if the government that yeardedicated every penny it collected in personal income taxes to paying justinterest on the debt, it wouldn't be enough" (3). One area where he is most certainly right is when he notes that weare not using the money we borrow for future investments and so, counter tosome economists' arguments, we are not leaving anything to futuregenerations except the debt. One is called Death byHyperinflation as prices spiral out of control and the dollar loses value,in time losing value by the hour. Thiswas a campaign theme for Bill Clinton, and the country responded to theargument by electing him. Much of Figgie's argument comes down toaccepting his analysis of the figures without actually seeing how he madehis calculations. He throws caution to the winds and statesthat everything is falling apart and we will be lucky to squeak through ifwe follow his prescription. He says thatpension and Social Security payments will be cut or eliminated by inflationand mismanagement. Of more uncertainty iswhether his counter-arguments really do away with the arguments ofeconomists who see the deficit as less of a problem than does Figgie. Figgie may be right about this and thaterring on the side of caution is a good idea, but he does not really err onthe side of caution in his book. Indeed, it is evident that manyof the country's creditors will have a major problem if the governmentdefaults on a debt, but it is less clear what will happen to the country asa country. Between 198 and 2 ,the deficit will have been increased by a factor of thirty-three. Figgie feels that indeed we have created a situation for ourselveswhere we must do what foreign countries want or they will stop lending tous, and if they stop lending to us we will not have the money to run thecountry. His assertion that Rome fell from excessive spending,however, is an assumption that historians might argue over. What he finds is total bankruptcy, something far beyond the eventsleading to the Depression in the 193 s. Figgie Jr. Figgie presents the arguments of economists and counters each one inturn. The perception is that this is what prevails now, thatwe are doing nothing about the deficit. Of course, there is nothing new in that,and this has been the pattern with many of our major crises and on avariety of issues throughout our history. Eitherwe are going to be bankrupt because he is right, or we will be able tosurvive because he is wrong. His analysis requiresclose reading and some research to determine whether he is shading thefigures or reporting accurately on the situation. No matter how the actual eventmay differ in specifics, in general it will mean that the bottom hasdropped out of the American economy, and he sees a number of differentpossibilities for how the country will die. Given the shorttime Figgie has allowed for us to do something about this problem, it wouldseem to be a hopeless task if he is correct. Atthe present rate, the debt will increase to $6.56 trillion, roughly ninetimes the amount the government will collect in personal and corporateincome taxes in that year. His belief is based on a view ofthe national deficit, its origins, and the rate at which we are adding toit. He saysthat they will have destroyed this country in a way that no military poweror dictator has ever been able to do. Swanson, Bankruptcy 1995: The Coming Collapse of America and How to Stop It. Figgie isabsolutely correct to emphasize the need for the government to engender andmaintain credibility with the public. There are certainly consequences, but what are they? One of the problems with Figgie's analysis is that he likes to makecomparisons between national debt and personal debt, which is not alwaysinstructive. By 1995, Figgie says, the United States willnot even be able to afford to pay the annual interest on this debt. This is always a goodprescription, but realistically it is not what happens. Figgie does provide an outline of the consequences that he foresees.He says that as many as 2 percent of American jobs will be gone. Figgie says, for instance, that when an individual borrows too muchmoney from loan sharks, the mob sends someone to break their legs. Figgie clearlyfeels that it does and argues against economists who believe that it doesnot. Figgie, Harry E., Jr., Gerald J. Of more importance are the comparisons he makes with variouscountries of the Americas since the end of World War II, though again he iscomparing countries with very different economic strengths and weaknessesas if they were originally equal, when in fact they were not. This is a timely issue that has been argued from all perspectives inrecent years, with many Americans fearing the effect of the deficit whileothers believe it is not the catastrophe that it has been made out to be.Figgie's timetable is probably the most arguable point in his book, sinceit seems to be a relatively short period of time that he is giving us tocompletely bankrupt ourselves if no changes in national policy are made.He is not one of the doomsayers who believe that we have already passed thepoint of no return, clearly, since he says that there is a way to stop thecoming collapse, meaning that within the same three-year period we couldalter sufficiently to save ourselves. It has been clear for some time that ourinfrastructure needs attention and that research and development and otherlong-term investments have not been given the attention they deserve. He seesthe issue in terms of creating a campaign not unlike that for waging a war,with a general at the head, a deficit-war cabinet, and the setting ofoverall strategic goals to be met by the country. Harry E. He sayssomething similar will happen to the country, metaphorically, but preciselywhat does this mean? He notes that we already owe more money to foreigners than any othercountry on earth. Indeed, much of his analysis is based on a generalmistrust of politicians and economists, a doubt that we are being told thetruth, and the assumption that a lack of consensus means that the worstpossible solution is the correct solution. Figgie calls on the president tocreate an atmosphere in which what needs to be done can be done. There is something odd about this argument considering thatFiggie clearly does not want us to borrow any more. He does this, most likely, to make the materialunderstandable to those who have little economic background, but it gives afalse impression of the situation and makes the reader also think in termsof personal debt, which in many ways is a different dynamic than nationaldebt. Figgie notes that history should have taught us better, and he may beright in this. Muchof the concern over the debt involves how we relate to foreign countriesand whether our indebtedness to these countries bodes ill. When herejects their view, he does so out of belief more than evidence.Unfortunately, proving who is right necessitates living through theproblems and seeing if we survive. Swanson) presents anightmare scenario of the next three years, holding that by 1995 Americawill have spent its way into bankruptcy. He waspart of the Grace Commission under the Reagan Administration and as amember was privy to certain documents and figures showing the effect of thebudget deficit over time, with projections to the year 2 . His greatest concern in the immediate is the size of theinterest payment each year, for this is what is the real drain on theeconomy long before any principal is paid back at all. He says of this book: "What it doesbest is to bring the mammoth, almost incomprehensible problem ofWashington's debt into the living rooms of everyday American citizens, andforces us to think about the likely consequences" (xiv). Is it even accurate? Figgie's book provides food forthought, but it is not entirely convincing about the degree of danger weare facing, about the timetable for disaster, or about his suggestions onhow to stop this disaster from taking place at all. It is related tothe principal, of course, but it is becoming a staggering figure that wewill have trouble repaying in itself. Figgie is notan economist, and he believes that the deficit does matter. Another approach he calls Death by Panicas traders and investors on the world's financial markets put America outof business. Boston: Little, Brown and Company, 1992.----------------------- 9 In any case,comparing the Roman Empire to the United States and the roman era to thepresent industrialized world is an exercise in some futility, since thedynamics are simply very different on the international scale. He calls on thepeople to learn about the issue, to vote on the issue, and to see thattheir leaders heed them and do what they want done. Figgie does not make it clear what differencecan be made with the sorts of investment Clinton has proposed. Figgie expands on these possibilities and shows how the crisis willbe precipitated by a long series of lies and obfuscations on the part ofgovernment and our leaders, with congress and the president blaming oneanother for the entire problem. It would take more than threeyears to mobilize the kind of public support he says is required. He also provides graphs and charts to back up his assertions and toshow the direction in which the country is moving. Rudman, a man who has had direct experience of the deficit and of thegovernmental response to it. Figgie's prescription for change requires careful considerationwhether his doomsday scenario is accepted or not, for the deficit is aproblem whether it is a problem of the same proportion Figgie sees or not.The public also clearly wants something done about the deficit, and sincethe economy rides so heavily on public confidence and thus in publicperception, politicians ignore this fact at their peril. Figgie gains some support from the foreword written by Senator WarrenB. If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.

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