Standard and Poor’s, one of the nation’s most respected credit rating agencies, lowered America’s credit rating from AAA to AA+. It was a shot heard around the world, but it should not have come as a surprise. What is also not surprising is how Barack Obama and other Washington politicians are dealing with the news. We hear whining… lots of it. We hear blaming… tons of that too. But we still aren’t getting real action on the real problem: there’s just too much spending going on in Washington.
When Standard and Poor’s dropped America’s rating, they put out a detailed report and gave clear rationale as to why the action was taken.
We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process. We also believe that the fiscal consolidation plan that Congress and the Administration agreed to this week falls short of the amount that we believe is necessary to stabilize the general government debt burden by the middle of the decade.
Politics and debt. Obama, the Democrats, and even some Republicans might not understand the questions, but those are the answers.
It’s important to summarize what’s going on here before we dive into the aftermath of the Standard and Poor’s action. The company, along with the rest of the world, was watching the debate going on in Washington regarding the debt ceiling. The debt ceiling describes America’s borrowing limit. Think of it as America having 10 credit cards, and the country has maxed-out all of them. What is the country to do? Get another credit card, of course. In other words, America needed to get permission to raise the limit that it could borrow to pay its bills.
Most people knew that Congress would raise the debt ceiling, but the terms of that deal are what captured the attention of grassroots folks around the country? Would the deal result in real spending cuts? Would Washington finally realize that the country is on an unsustainable path to bankruptcy and turmoil? Unfortunately, the answer to both questions is NO.
Every time there was a stalemate, Obama and the Democrats would blame the Republicans for “playing politics.” I wish the American people would see through the rhetoric and actually study what is being said. Just because Obama says things like “fair” or “common sense” or “balanced approach” or “let’s put partisan politics aside,” doesn’t mean he’s doing it. In fact, he and the Democrats simply wanted the Republicans to join them on raising the debt ceiling with no conditions on reducing spending.
On the Republican side, this was yet another missed opportunity, because no one has the political courage to actually do what needs to be done. The deal that was finally passed does NOT cut spending. Next year, Washington will spend more than this year. The year after that, it will spend even more… and so on and so on. This is because each year, the budget AUTOMATICALLY increases. Any cuts that were talked about apply to scaling back on the built-in increases. A spending cut is not a spending cut unless the spending actually goes down!
And so, is it any wonder that Standard and Poor’s dropped America’s credit rating? Washington did not address the problem. The only thing Washington politicians did was ensure that America would go further into debt.
The stock market reacted on Friday and Monday by taking a dive. The Dow fell below 11,000 for the first time since November. Over 5 percent of its value was lost on Monday following the 635-point plunge.
How did Obama and the Democrats react? They blamed everyone but themselves. The latest tactic is to blame the Tea Party movement. This has to be one of the stupidest actions in the history of politics, but it certainly is not stopping Obama and his gang? Blame the Tea Party? The Tea Party movement was started because Washington is out of control. It spends too much. The ONLY thing keeping the debate on the debt ceiling focused on the idea of spending cuts was the Tea Party. Our spending is out of control. Standard and Poor’s dropped the country’s credit rating because of it, and now the group most responsible for pushing lower spending is the group getting blamed. Insanity!
Obama took to the podium on Monday to address the credit rating downgrade, and what did he push? You guessed it… tax increases. This is another area where Americans need to cut through the media and political rhetoric and simply look at the facts. Obama said once again that the wealthy need to “pay their fair share.” HELLO! Half of all working Americans don’t pay ANY income tax. The top 5% of taxpayers pay nearly 60% of all income taxes. (Click here for previous column.) The tax system is NOT based on fairness. It hasn’t been since the inception of the income tax. It’s designed to pit one group against another so that liberals can push even more and more spending.
Also, people must remember that this is a SPENDING problem. We got into this mess because Washington spends too much. For each dollar America spends, 40 cents is borrowed. We can only get out of this problem by cutting spending. We could tax every “rich” person at 100% and still continue to run deficits. Cutting spending is the only way to get back on track.
Obama and his advisors will continue to blame Republicans, the Tea Party, or anyone else they can think of. What we need is not whining or blaming. We need leadership, and we need it now.