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Distributor's Link Magazine Summer Issue 2011 / VOL 34 / NO.3


10 THE DISTRIBUTOR’S LINK Jim Truesdell James Truesdell is president of Brauer Supply Company, a distributor of specialty fasteners, insulation, air filtration, and air conditioning with headquarters in St. Louis. Mr. Truesdell is adjunct professor at Saint Louis University and Webster University. An attorney and frequently published writer, he is the author of “Total Quality Management: Reports From the Front Lines”. BUDGET STRUGGLES TURN SERIOUS Every year my small distribution business goes through a lengthy budgeting process. We estimate our expected revenue with detailed forecasts from our outside sales people and similar projections from our product managers. We then look at all of the various expenses we envision from cost of inventory to rent and maintenance and the payroll for our employees. If the revenues don’t exceed the expenses we start over again. We look at where we have to cut back in people, supplies or equipment in order to make the budget balance. If we don’t present a balanced budget plan the banks providing our line of credit will, in most instances, be unwilling to continue funding our operations. Likewise, my personal credit card has a limit. I can only put so much on the card until that limit is reached and my purchases will be turned down. If I want to increase that credit card limit I will have to present information to the card company showing that I will be able to meet my financial obligations as they accrue. These are the experiences and the reality under which most small business people and consumers operate. These are the realities that our federal government has been able to ignore for most of the past 60 years. But it appears the time of turning our heads away from the inevitable consequences is over. We have seen a number of European governments hit the limit of their “credit lines.” In recent weeks we have seen Standard and Poors raise questions about the creditworthiness of U.S. Treasury debt. All of a sudden it is dawning on the American public and even our elected representatives in Washington that we have very little time before we must seriously address our burgeoning deficit. The problem is that some of the proposals for meeting the shortfall, particularly those advanced by the Administration, rely more on tax increase proposals than on deep spending cuts. In fact, there was considerable resistance to the serious spending cuts proposed by significant groups of the newly elected congressional representatives who were just taking their seats. Both leading Democrats and the Republican Speaker John Boehner resisted some of the stronger calls for fiscal austerity as they struggled to reach a compromise for a continuing resolution to keep the government funded while the final details of a budget were hammered out. President Obama became engaged in the process late in the proceedings which finally brought agreement. The National Association of Wholesalers and other business trade associations criticized the President’s 2012 budget as “business as usual.” An Administration staff report called for spending increases, annual deficits of hundreds of billions and a public debt that would increase to more than 87% of gross domestic product by 2021. NAW criticized the President for totally failing to address entitlements such as Social security, Medicare or Medicaid. please turn to page 35


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