Joe Boyles – Guest Columnist
Last week’s downgrade of United States Treasury bonds by Standard and Poor’s is historic. S&P has been rating our government bonds since World War I; this is the first downgrade. The other two international rating agencies, Moody’s and Fitch, have not followed suit … yet — but can similar action be that far behind?
The fundamental reason behind the downgrade is our public debt, now approaching $14.5 trillion. This level of debt is about 70 percent of our gross domestic product. That’s bad, but the future looks even bleaker as the Obama Administration projects annual deficits in excess of a trillion dollars for as far as the eye can see. This is unsustainable … which the S&P recognized when they downgraded our bonds from AAA to AA+.
The battle over the debt ceiling which concluded (temporarily) before the August 2nd deadline was a precursor to the downgrade. The president and his party wanted a balanced approach which would include raising taxes on “millionaires and billionaires.” (Jargon rhetoric like this makes my head explode.) The Republicans countered with spending cuts and no tax increases. I’m not certain who “won” the debate, but I am certain that we’ve turned the corner on the debt ceiling – no longer will Congress blindly raise our “credit card” limit as they have done dozens of times without some sort of debate on the prudence and what must give. The days of blank check spending are over.
If that message needed reinforcement, then S&P delivered the coup de grace with Friday’s action.
Meanwhile, the president appears feckless in his response. No president can control the economy, but he gets credit for times when things go well and blame when they don’t. Right now, he’s getting a lot of criticism. Will this hold true 14 months from now when the course of the next election is set. Who knows what will happen between now and then, but economies are like aircraft carriers at flank speed – it takes time and space to slow and turn them around.
Let me give you a formula for getting this economy rolling again. First, let’s decrease federal spending. That means tackling entitlements and reforming them for the 21st Century, not the New Deal and Great Society they were created for. Second, let’s reform the tax code and make it flatter. Remove a bunch of silly loopholes that accumulate through lobbying by special interests. Third, let’s pull the shackles off business in the form of health care mandates, environmental rules based on poor science and general regulation. Fourth, let’s begin domestic energy (oil and gas) exploration and production and watch tens of thousands of jobs be added to the economy. Then, let’s stand back and watch the American economy grow impressively and lead the world as it should.
Do I believe that Barack Obama can provide the leadership to make these things happen? In a word, no. He is ideologically incapable of closing the gap between the possible and the likely. His quiver is empty. The revolver is spent – no bullets, silver or otherwise.
While the American economy is headed downhill in a hurry, the president is out raising obscene amounts of money to finance his billion dollar reelection bid. Seems out of touch, doesn’t it? Who’s to blame for the economic morass? According to Obama, everyone and everything but him. More signs of unreality. What solutions does he offer? More spending on unemployment insurance, investment in green technology, blah, blah, blah. You know Mr. President, if you keep digging the debt hole, sooner or later you’ll end up in China … where most of our dollars are headed anyway.