So, in case you’ve been living under a rock for the last few weeks, there’s been quite the uproar over our debt ceiling and how the credit rating for debt issued by the United States might be downgraded from the top-notch AAA to something less. We’ll get to the debt ceiling in a minute but let’s take a look at one of the consequences of runaway spending and piling on of debt: U.S. Loses AAA Credit Rating From S&P.
The United States has lost its sterling credit rating.
Credit rating agency Standard & Poor’s on Friday lowered the nation’s AAA rating for the first time since granting it in 1917. The move came less than a week after a gridlocked Congress finally agreed to spending cuts that would reduce the debt by more than $2 trillion — a tumultuous process that contributed to convulsions in financial markets. The promised cuts were not enough to satisfy S&P.
The drop in the rating by one notch to AA-plus was telegraphed as a possibility back in April. The three main credit agencies, which also include Moody’s Investor Service and Fitch, had warned during the budget fight that if Congress did not cut spending far enough, the country faced a downgrade. Moody’s said it was keeping its AAA rating on the nation’s debt, but that it might still lower it.
Yes, yes, I’ve heard all the overheated venting about how those damned Tea Partiers are ruining the country and crashing our economy and how those eeeviiiilll Republicans gleefully stomped on “the workers” in order to feed more money to the banks/oil companies/insert-evil-corporation-du-jour-here. I also heard the lunacy spouted off by our President about how the raising of the deb ceiling – again – wasn’t a matter of spending more money. It was just a matter of covering what we had already spent.
The fact that the Tea Party is so often painted as crazed fanatics, hell-bent on… well, anything bad tells you that their opponents have lost the argument. The Tea Party is, at its core, concerned with only 1 thing: the massive overspending of our federal government on all manner of things that fall well outside the scope of its authority as clearly stated in the Constitution. Demanding that our public sector adhere to that scope and not knowingly spend money it doesn’t have is ruinous to our country? You’re gonna have to pack a serious set of arguments to sell that one.
And as for the Republicans – and Bush, of course – being the cause of all of our economic woes, well, the facts don’t bear that out. The black-and-white numbers show that the debt has ballooned massively since the Democrats came into control, and that’s dating back to 2007 when they took control of both houses of Congress. Since 2009, when they added to their control in Congress and got Obama in office it has only gotten worse. The excuses are flying hither and yon, but the undeniable fact of the matter is that the Democrats were in complete control of Congress from January 2007 to January 2009, and in complete control of both Congress and the White House from January 2009 to January 2011. They can try to blame Republicans all they want – and they’re giving it everything they’ve got to do so, believe it! – but they could have done anything they wanted to do at any time during that period. The debt skyrocketed. They’re responsible.
The most jaw-dropping part of this recent bit of political theater was the President’s adamant assertion that raising the debt ceiling wasn’t about spending more money, it was about covering what had already been spent. Let’s look at that statement using an analogy that’s closer to home for most of us. If you ran up your credit card to the limit and went a little over, in fact, and the bank’s response was to say, “Oh, don’t worry about it! We’ll just raise your limit to cover those purchases” would you generally consider that to be a good thing in the long run? So your credit limit goes up and you “cover your bills.” That would be fine if you stopped spending and paid it off… but you don’t. You buy more. And then you hit that credit limit again. Now, if the bank keeps upping it and you don’t change your spending habits, is there any doubt as to what that leads to?
Well, the credit rating agencies know and they can’t ignore the truth like some of our politicians do. S&P is just the first, and let’s be clear about what the downgrade was aimed at. It’s the overspending and the lack of sufficient cuts that led S&P to consider US debt to be a worse risk than before. Sure, both parties have contributed to our current situation. The Dems are the ones trying to laying the blame on everyone but themselves and they’re the ones that have enacted policies that have spiked our debt higher. They are not the ones most likely to do what needs doing to correct the problem. So long as they’re at the controls, we’re going to have more announcements like these. We can do better.