Global uncertainty could play an outsized role, but the United States has an urgent need to reduce and address debt, say experts.
The global economy’s continued challenges, including rising operating costs; labor challenges; trade tensions between the U.S., China and Europe; wars in the Middle East and Ukraine; threatening events in the Pacific; and political uncertainty in Latin America all make for a volatile and unsettling global picture in 2024. How can business leaders win through all the chaos and disruption and become tomorrow’s leaders with future-ready organizations?
Since 1999, The Conference Board, a nonprofit business membership and research group organization, has surveyed CEOs and later C-suite executives across the globe to identify the most critical issues they face and the strategies they are developing to meet them. Its latest survey, conducted in fall of 2023, asked 1,247 C-suite executives, including 630 CEOs, for their views on external and internal stress points, emerging AI technology, geopolitical risks, human capital management and sustainability through the lens of ESG.
Dr. Lori Esposito Murray, president of the Committee for Economic Development, the public policy center of The Conference Board (CED), said “U.S. CEOs say the geopolitical risk that concerns them the most regarding business operations is homegrown – the burgeoning U.S. national debt and deficits.
“The U.S. fiscal outlook continues to deteriorate, with the deficit for FY2023 topping estimates at $1.7 trillion. The game changer in our nation’s complacency about debt: The cost of servicing the debt is rapidly rising due to inflation and rising interest rates, consuming as much of the federal budget as defense spending and crowding out national priorities,” she continued.
The increasing practice of issuing U.S. Treasury securities to finance deficits and debt places tremendous strain on the financial system, potentially raising business borrowing costs, limiting access to capital and lowering standard of living, Dr. Murray said.
“The congressional debate this year over FY2024 spending levels has contributed to a historic collapse of governance in the U.S. Congress, a broken budget process, the brink of a national default, a looming government shutdown and the potential downgrading of the U.S. credit rating. U.S. global leadership and national security are at risk.”
Dr. Murray says the need for bold action is urgent.
“A national strategic goal should be to reduce the U.S. debt-to-GDP ratio to 70%. To begin to achieve this reduction, a Bipartisan Congressional Commission on Fiscal Responsibility should be established to immediately address the biggest drivers of deficits and the long-term debt: Medicare and Social Security, whose Trust Funds are becoming insolvent. To address the revenue challenge, the Commission should undertake comprehensive tax reform based on the principles of fairness, efficiency and simplicity,” she continued.
“The debt crisis is here – not down the road. As a nation, we must act now.”
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