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.
Two days after the debt deal was inked, the stock market plummeted 500 points, erasing the gains for the year in a single day. While the crisis in Europe contributed to the plunge, much of the impetus was the bleak economic outlook in the U.S. The Dow finished the roller coaster week with the largest five-day drop since October 2008.
On Main Street, uncertainty is the order of the day. According to most experts, the housing market is now in its second, or double, dip since December 2007 when the Great Recession began. Unemployment remains so high, you don’t need 20/20 vision to see it.
On that score, the President is disingenuously touting the July jobs report. But, the hundreds of thousands of people who left the job force last month offset the jobs that were added. In fact, the employed-to-unemployed ratio has not been as low as it is right now since January 1984. In looking at the persistent unemployment situation, we’re watching a slow-motion train wreck. Our year-to-date GDP numbers make this sorry situation even worse. At 1.3 percent, economic growth is practically invisible and puts us even farther behind the unemployment curve.
There is some comic relief amid the gloom and doom. In the World of Weird, a TV ad is currently running that rivals the 2010 Christine O’Donnell “I am not a witch” pitch. In it, viewers can gaze upon the scowling visage of the perpetually self-important Chris Matthews as he extols Obama’s love of country. We can imagine the sustained howls if Fox News featured Chris Wallace in an ad to support a Republican candidate. The double standard is as alive and well as the double dip.
But, there’s nothing funny about Congress and the President refusing to face a difficult balance sheet and come up with rational corrections. Unfortunately, refusal is a script too many of them have been following for the past three years. Harry Reid’s Do Nothing Senate, for example, has done nothing more than raise platitudes to a political art form. And increase the debt by almost 50 percent since October 2008.
To get an afterglow from that we’d need some serious glow in the dark.
See you in the mirror.