Now that politicians are about finished congratulating themselves for averting a debt crisis of their own making, where are we really? If we think we’re basking in the afterglow of debt relief, we need some serious meds and so do our politicians. Over in Fairy Tale Town, the President is planning his upcoming bus tour of the Midwest at taxpayer expense. We can expect to hear a lot of bragging about his economic policies. If anyone believes this is not a campaign trip, get a grip. And Congress? After all that political posturing over the debt, the members fell back exhausted and are now on vacation and in denial.
Because, in the real world, Standard & Poor’s downgraded the U.S. credit rating on Friday from triple-A to AA+. The historic move means that U.S. Treasury debt is no longer among the safest investments in the world. The action was prompted by the failure of the debt ceiling legislation to address America’s chronic finance problems, a fact most of us knew already.
More than one dozen countries now have a higher credit rating than the U.S. Lower credit ratings generally necessitate higher interest rates on the debt instruments in order to attract investors. The interest we already pay on the debt would feed several small countries annually. Higher rates grow the national debt at an accelerated pace, compounding our current problems.
The Standard & Poor’s downgrade is the first crack in the timbers supporting our economic viability. Unless Washington politicians actually get serious about resolving the debt, there will be many more until the economy finally falls. Unfortunately, as we've witnessed ad nauseam, the strength of character required for cutting entitlements and increasing revenue is lacking in the majority of our politicians.
Nothing is more clear in that regard than Obama’s insistence that the debt ceiling be visited again only after the 2012 election. His stated reason is to spare the country and the economy the suffering caused by protracted debt debate debacles. But, rational minds cannot accept his explanation. Purely and simply, he doesn’t want the debt reminder to negatively impact his candidacy. People, it is way past time to reject Obama’s dysfunctional out of sight, out of mind re-election strategy. If we continue to be persuaded by political sleights of hand, we deserve to fall into the yawning financial abyss stretching out before us.