While Congress is taking yet ANOTHER vacation this year - their fourth in four months, in case you're counting - we're remaining focused on the topic that will face them when they return in early May: the debt ceiling.
Many members of what currently passes for leadership in the GOP still want to use the debt ceiling negotiations to push their social agenda. However, as we explained a little over a week ago - and as others have explained in greater detail since - the debt ceiling is not a mechanism of our government that should be subject to political baseball.
We mentioned on Tuesday that Standard & Poor's, or S&P, one of the world's largest financial services companies, recently gave a poor outlook on the future of the U.S. debt. As S&P has confirmed, they have not yet changed their bond rating on U.S. debt, so much as made it clear, that they have no faith in the ability of our political process to make genuine and effective moves toward fixing our country's long-term debt issues.
In short, at least some of our politicians are being childish, selfish, and ignorant of how credit works on a macro scale.
We are of two minds about S&P's downgrade of our government's long term ability to repay its debt.
Political strategist Paul Begala recently pointed out something we remember very well about the run-up to the Great Recession: "Given that the Financial Crisis Inquiry Commission called the credit rating companies ‘key enablers of the financial meltdown,’ it’s difficult to know how much credibility... should be given [to S&P's opinions]."
Even if you dispute the legitimacy of S&P, or their forecast, the facts are very clear - and something we fear we may need to repeat constantly in the same way some people nag their friends and relatives to quit smoking.
The facts remain the same no matter how you look at them: our country has been spending more than we take in for too long. Over the last thirty years, the method of financing our government's responsibilities that members of both parties have either pushed or accepted has proven unsustainable.
Addiction and denial are a cycle - in governments as much as in individuals. During the election cycle, we tell voters that we'll always cut their taxes and give them everything they demand of their government. Then - when it comes time to actually pay for our responsibilities - we cough, gag, scream, choke, and insist that everything is fine as we gasp for our collective fiscal breath - then take another long drag of long-term debt financing.
The issue of whether financial agencies like S&P are hacks, or whether they have any credibility left to lose after enabling the massive financial collapse is completely moot. Even a hack finance guru can recognize when a fiscal addict has reached a point where their actions are dangerous and self-destructive.
We do need to stop spending so much: on tax credits for people and corporations that don't need them; like many military hardware programs, that are more wasteful than useful; and on subsidies for companies that obviously do not need them, like oil and gas companies. We also need to bring in more revenue - if a business is in the 25% tax bracket, then the business should pay 25%, not weasel its way down to 1% or less.
As we have said more than once, getting America's fiscal health back is not a cut OR raise revenue choice. Both actions MUST be taken together.
It is time for America to deal with its many addictions - or else.
