Sunday, June 19, 2005

Investing for the Future—Or Spending it Now

In the past week I’ve been reminded of three examples of governmental programs that will impact generations into the future.

The USA’s Strategic Petroleum Reserve is almost full. We have been stockpiling 75,000 gallons/day, not necessarily a huge amount, but after doing it for 30 years we will have our 700 million barrel goal achieved in August. The oil comes from oil producers who have paid royalties on public land with oil in lieu of cash. At today’s prices the USA is sitting on a reserve worth $35 billion, yet it isn’t even calculated into the national budget battles.

Many years ago the State of Alaska set up a special fund with a portion of their oil revenue. Again after many years of putting a small amount each year into the fund, it has grown to over $20 billion and pays each permanent resident of Alaska around $2000 each year. Talk about a reverse state income tax!

Finally, in my home state of Illinois the governor decided to forego paying money into the retirement system for state employees. He will save around $1 billion/year for the next two years. However, this savings today will constitutionally have to be paid by future generations. Estimated cost is $30 billion. Pay now or pay a lot later!

What are you doing in your family, business and community? Are you spending it now or are you making the long term investments that will be looked upon with awe in the future?

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