Sunday, August 7, 2011
The Deficit and Credit Ratings: Truth Will Set Us Free
That Standard and Poor’s reduced the credit worthiness of United States’ bonds should surprise no one. If the reckless deficit spending is not enough, that so little was accomplished coming to grips with the problem and that politicians were acting like self-serving hacks far more dedicated to destroying their opponents than making any real progress further establishes the government of the United States is not exercising sound fiscal judgment. When a government has no financial self-discipline and no guiding principles guiding its fiduciary responsibilities, how can they be worthy of the highest AAA rating indicating the lowest level of risk?
While the Tea Party faction certainly showed a lack of political sophistication through out the crisis resolution process, give them credit for being the one political entity that recognized runaway deficit spending must stop and Federal spending must be scaled back. That is the same message the credit rating entities have established too. So how is it then that the Tea Party sympathizers are terrorists or held the American system hostage?
They’re being set up for the fall, to be the ones on whom the credit ratings reduction should be blamed when if the unthinkable had happened, and the Democratic led Senate and incompetent Obama White House had supported their position, the problem would have been avoided. That the Tea Party refused to give in to traditional Washington politics and compromise made them the easy target.
How hilarious it is in hindsight that the doomsayers were screaming credit reduction and a stock market crash would result if a deal weren’t struck by August 2nd the date on which America would have technically gone into default. Well, the market crashed anyway and the bond ratings were reduced in part because the deal struck did not go far enough.
The blame clearly belongs to Barack Obama and his agents in the Senate, most notably Majority Leader, Harry Reid, who used Senate rules and parliamentary shenanigans to keep house measures from a fair debate and vote in the upper chamber. While the Democrats screamed and hollered all the Republicans sought to do was block action, the House submitted a budget and two proposals or resoling the debt. Where were the Senate proposals until the 11th hour? The original position was to have a “clean” vote to simply raise the deficit limit. That’s all.
With only control of the House, the Republicans could only do so much. Had they not compromised, the political damage would have been severe. Americans prefer wishy-washy meaningless settlements in the name of compromise (as if that’s a virtue when one side is right and the other wrong). The Republicans knew this and submitted but there wasn’t much they could do.
Right now, it’s time to go on an all out public relations blitz to get the truth out and to refuse to let the Tea Party become scapegoats for what is truly Barack Obama’s fault. Obama is the ONLY president ever to have allowed the trust in American credit worthiness be called into question but with huge government spending programs added on top of an already weak financial situation, with the so-called stimulus, Obama-care, and many sellouts to organized labor including the GM/Chrysler efforts, also is responsible for pushing lending into unthinkable territory.
The private sector needs to be energized. There can be no threat of higher taxes. Taxes which inhibit investment must be eliminated. Dreadful over-regulation must be nullified including onerous laws like Frank-Dodd on banking and Sarbanes-Oxley which strangles business in red tape.
The only solution is that the Senate must change hands and a strong Republican President must be elected. The Tea Party will play a key roll in helping this come true if they are not marginalized and demonized which is exactly what’s playing out in the news right now.