That Depressing And Degrading Downgrade

Standard & Poor’s downgrading of the United States’ credit rating, from AAA to AA+, is an embarrassment to our country — but it is a lot more than that.

The downgrade is a tangible reminder that our profligate spending and borrowing ways have yielded some of our sovereignty over our own affairs to others — be they ratings agency analysts, or bond traders, or foreign governments that hold large chunks of our debt.  When you borrow money, you inevitably give your creditors an element of power over your affairs.  They can raise your interest rate payments or tell you you can’t buy that new car.  Our staggering federal debt is giving entities like Standard & Poor’s or countries like China the ability to set their own benchmarks for our performance and to threaten further downgrades or higher interest rates if those benchmarks aren’t met.  These developments should be deeply troubling to anyone who is paying attention.

I’m afraid that the downgrade also will be another example our government’s ostrich-like ways.  Downgrades and higher interest rates are an entirely predictable result of our spendthrift budgeting, but those consequences were ignored.  We can hope that, with the shock of a downgrade, our government will start to behave responsibly — but so far the signs aren’t good.  Our Treasury Secretary argues that Standard & Poor’s got its math wrong, and our political leaders are just blaming each other for the problemSenator John Kerry — that well-known paragon of balanced budgeting and fiscal responsibility — even goes so far as to call it the “Tea Party downgrade,” as if the brand-new legislators who were elected on a platform of reduced spending and who insisted that the recent debt ceiling increase include some spending reductions were responsible for our trillions of dollars in accumulated debt.

We are not only burdened with unsustainable debt, but also with an inept gaggle of “leaders” who view every crisis as just another opportunity for political spin.

2 thoughts on “That Depressing And Degrading Downgrade

  1. Bob,

    I think I need to cry “foul” on this one, at least somewhat. Ever since the tax cuts under George W Bush, economists of multiple persuasions have warned that reducing revenue while increasing spending was dangerous. Whether we call them “job creators” or the “wealthy,” the fact remains that for higher income segments of the population the tax burden is lower now than it had been for the previous half century, while our spending (under presidents of both parties) is only increasing. We need an honest debate about our national priorities, and right now neither party wants to engage in it. The Tea Party in particular, though, by its refusal to countenance any revenue increase at all, passed up an historical opportunity to craft a “grand bargain” that could have satisfied S&P, angered the base of both parties (that’s probably good), and made meaningful progress toward reducing our deficit.

    Of course the Tea Party isn’t solely responsible for the deficit. It did, however, scuttle any hope of meaningful improvement until after the next electoral cycle. Whether this is the result of a cynical ploy to effect the results of the next election or instead the result of an ideological aversion to the mere existence of government, the result was both predictable and predicted.

    A final point: this really is simple math. If you spend more than you take in, you have three options: spend less, take in more, or do both. For all the talk about “living within our means,” I think here the solution is obvious. Indeed, every “bipartisan” commission, committee, panel or task force of which I am aware has reached the same conclusion: do both. It seems to be only the Tea Party that disagrees, to the great disadvantage of us all.

    Like

  2. Was feeling glum and blogging glum/guilty thinking all the while that you would likely have something positive to say today and that I should TRY HARDER to be optimistic. At least I am now feeling vindicated.

    Like

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