Heads have been spinning for months over news of layoffs, restructuring, bailouts, bank failures, TARP funds, Keynesian economics, Reagan-omics, Obamanomics, GDP, Socialism, Capitalism, nationalized health care, nationalized private businesses, wealth redistribution and higher taxes.

Expect the panic to end by July 4 — barring further political surprises.

Meanwhile, what are we to do?

Simple answer: Get our houses in order, which means getting a grip on practice cash flow.

Veterinarians have not received economic training except those of us who have an outside interest in the soft science of business.

But those in position to make decisions for our practices can develop a business plan that meets today's challenges and realities.

Answers to these current economic questions will have a bearing on our practices:

• Will the stock market ever get back to 14,000? (It will be a long time.)
• Will housing prices ever rebound to 2007 levels? (It will be a long time.)
• Will consumers ever rebound to the "free spending" ways of recent decades? (Unlikely.)
• What are the stimulus packages doing for us in the short and long term? (Look at California.)
• Will the current and new entitlement affect us five or 10 years down the road? (Yes.)

It all comes down to four issues: housing, the tax wedge, the long-term consequences of the downturn cycle and the unintended consequences of intended political decisions.

These are the core issues that affect our small businesses and future.

The housing boom drove the economy for the last decade (more or less) as people pulled equity out of their homes for cars, home improvements and a dialed-up lifestyle including veterinary services.

This type of financing is dead, so earned income will pay for future veterinary services.

The tax wedge

The tax wedge is what we really need to watch because it specifically affects disposable income.

What is the tax wedge?

It is the percent of earned income that goes to the government before workers get paid. A bigger wedge means more of the paycheck goes directly to the government. The smaller the tax wedge, the greater the take-home pay. The more take-home pay, the more there will be for discretionary spending, including that for veterinary services.

The tax wedge is expected to start going up in the next two years and likely will keep rising over the next decade.

The current tax wedge is about 30 percent. It likely will exceed 40 percent and might even hit levels seen in Europe, about 46 percent.

It took gasoline prices of over $4 a gallon to change American driving habits. Similarly, when the tax wedge exceeds 40 percent there will be a disincentive to work, cutting discretionary dollars still more.

Each state and community will have differing tax wedges that we all need to consider for our specific practice locations.

Then, considering our niche and business plan, we can adjust to ensure we are positioned to be next to the "new railroad tracks" coming to our town.

Many of us don't want to understand the importance of numbers. The veterinarian's mantra has been: "I went into medicine because I did not want to go into business."

It's time to change that.

In the business arena, we'll soon be in trouble if we worry only about clients' take-home pay.

The Dale Carnegie sell-sell-sell mentality is foreign to many veterinarians and rightly so. That was aimed largely at selling products and services that consumers may not really need or want.

A considered "triumph" of that marketing technique was when many cars got more oil changes and premium gas than the manufacturers recommend.

Imagine selling excessive, unwarranted medical procedures to unassuming human consumers.

It is happening, but it is not good medicine. Instead it erodes confidence in the profession.