Sacrifice and Pay Back the Billions Now

<i> Lee J. Iacocca is chairman of Chrysler Corp. </i>

When I was growing up in the ‘40s, we used to have a lot of expressions just like the kids do today. We were always preoccupied with numbers. A fast car would “go like 60.” Everybody wanted to “live to be a hundred.” And a “million” of anything was awesome.

All I knew was that a million was close to infinity. But now, 40 years later, “billion” (that’s a thousand million), has crept into my vocabulary. No, I don’t go around saying “Baby, you look like a billion,” but I did borrow $1.2 billion when Chrysler was dying (and paid it back); I spent a billion to bring out our new mini-vans; and I just signed a billion-dollar labor contract. But just as I’m getting the hang of what “a billion” means, “trillion” starts cropping up. (That’s a thousand billion!)

Except for astronomers, hardly anyone ever uses the word “trillion.” Even our own federal government didn’t comprehend it until 1981 when, after 206 years, it found itself $1 trillion in debt. And with that debt doubling in just four years to $2 trillion, people are starting to ask, “Hey, what is this?” In four more years, when that same debt reaches $3 trillion, those same people are going to get downright mean about it.

Let me try to explain this mess for you. Let’s imagine that our government follows its own truth-in-lending laws and levels with us. Every year with our tax forms we would get a statement telling us where we stand on our debt. Right now it would read like this for the average family of four:


“Dear Mr. and Mrs. Taxpayer:

“Your share of the national debt is now $34,737.32. In the past 12 months your share has increased by $4,233.56. Your share of the interest bill this year is $2,174.73.

“Have a nice day.”

If Americans saw the debt personalized like that, it might start a revolution. And maybe we need one.


The interest alone on the debt is now running about $150 billion a year. Remember, that doesn’t pave a single road, hire a single cop, educate a single kid or feed a single poor family.

Just five years ago at Chrysler, we had a similar problem. Our debt was so high, I found myself paying more than $400 million a year in interest alone. That meant I was more than $1 million in the hole every single day before I even got to work.

I know how Chrysler got into such a financial mess. Some bad luck. Some bad decisions. Some people in the wrong jobs. And some screwed-up priorities. But I’ll be damned if I know how the most powerful country on Earth got into such a financial mess. And most of it in just the last five years--during a period of “recovery!”

If things weren’t bad enough, Washington in its infinite wisdom has now decided that tax reform is more important than the deficit.


Talk about fooling the people with a decoy. They tout the new tax-reform bill as saving the average family about $400 per year. That helps it play in Peoria. But in that same year, that same Peoria family’s share of the national debt goes up by $4,000, or 10 times more than the tax break. So their account gets credited for $400 and debited for $4,000.

They must think we’re all pretty stupid out here in the boondocks. But we know how to balance a checkbook. We know how to live on a budget. And we sure as hell know what happens when somebody in the family goes nuts with the credit card.

Washington has gone from “tax and spend” to something a lot worse--"borrow and spend.” Now it’s pass the plastic and send the bills to the kids. So maybe we should hear from the kids on this subject. Maybe we should restrict the vote to those under 30 years old, because they’re the ones getting stuck with the bills.

Three years ago, I suggested that we start balancing the books by cutting the deficit--then only $120 billion--in half. My plan was super-simple: Cut $30 billion in expenses and add $30 billion in revenues. (That’s a tax increase, folks.) To keep it fair and bipartisan, you attack the two most sacred of all the sacred cows in Washington. You cut 5% out of defense ($15 billion) and match it dollar for dollar with a $15-billion cut in domestic programs. Then you nail the revenue side with 15 cents a gallon on gas (that’s worth $15 billion) and a $5 per barrel tax on imported oil (another $15 billion).


My “four fifteens” would still work today, but now it would take $100 billion to cut the deficit in half, so I guess we would need “four twenty-fives.”

I was surprised (and honored) when the President called me in to discuss this plan. But I was quickly disappointed when his advisers told me that such a plan could never work. They never challenged the economic sense of it, just the politics.

My idea’s major political flaw was that it asked for sacrifice. It was the gas-tax part that really gagged the pollsters. They said it was the most unpopular tax you could lay on the American people. And that was with a gas tax of 4 cents a gallon (today it’s all the way up to 9 cents) compared to $1 to $2 in most other nations of the world.

Politicians get elected by giving us goodies, not by taking them away. As Walter Mondale learned the hard way, asking for sacrifice is political suicide. So we can’t get too mad at the politicians for letting the deficits run wild. Suicide is a lot to ask of anybody.


And that leaves nobody to blame but ourselves. The people in Washington live by polls. They don’t lead public opinion, they follow it. Democracy works from the bottom up. So the answer is to change the polls. The day the pollsters report that a majority of Americans are willing to sacrifice in order to turn our budget scandal around, you’ll see it fixed.

I’m convinced that if Americans really understood how deep in the hole they are, and just what they are doing to their kids’ futures, they would not only accept sacrifice, they’d demand it.

When I paid off our loan guarantees, I said: “We borrow money the old-fashioned way; we pay it back.” I think the same goes for us as a nation. We borrowed it and we ought to start paying it back. And I mean now!