Fitch Ratings downgraded U.S. sovereign debt from AAA status to AA+ on Aug. 2, a move the agency warned might happen back in the spring when the federal government toyed with the idea of defaulting on its debt.
That default didn’t happen. But for Fitch, that springtime dalliance with fiscal insanity was reason to enough to question the stability and the seriousness of our institutions:
In Fitch’s view, there has been a steady deterioration in standards of governance over the last 20 years, including on fiscal and debt matters, notwithstanding the June bipartisan agreement to suspend the debt limit until January 2025. The repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management. In addition, the government lacks a medium-term fiscal framework, unlike most peers, and has a complex budgeting process. These factors, along with several economic shocks as well as tax cuts and new spending initiatives, have contributed to successive debt increases over the last decade. Additionally, there has been only limited progress in tackling medium-term challenges related to rising social security and Medicare costs due to an aging population.
Naturally, the portion of the political class that cheers for Team Blue was flabbergasted at such a downgrade. The obvious response: shoot the messenger.
Former Clinton administration Treasury Secretary Lawrence Summers called the downgrade “bizarre and inept.” Current Treasury Secretary Janet Yellen said Fitch’s decision was “arbitrary and based on outdated data.”
The unseriousness of such statements might be amusing if they occurred against the backdrop of a nation that had a stable political class that could agree to hold adult discussions about spending, taxes and debt.
But they don’t. Instead, we have performance art pols – including current GOP presidential front-runner Donald Trump, who openly advocated the idea of a debt default back in May to get Democrats to capitulate on spending.
Some of those same artists are intent on allowing the government to shut down in a couple of months if they don’t get their way on spending. That’s not a way to run a government – never mind one that inspires confidence in the broader global market.
At the same time, neither party wishes to engage in real discussion, or even mentions, of reforms to the biggest federal expenditures – entitlements like Social Security and Medicare.
Lest we forget, the Biden administration has been among the most fiscally irresponsible in recent history (right up there with the fiscal incontinence of the Trump administration before it).
Trillions of dollars in (mostly borrowed) stimulus money, expanded federal spending on government operations, industrial policy and so on show that the current president is – with ample bipartisan support – a paragon of profligacy and indebtedness.
Contrary to Mr. Summer’s molten hot take about the Fitch downgrade, the only “inept’ and “bizarre” actions on display are those coming out of official Washington, from both sides of the aisle, over the span of more than 20 years.
The opinions expressed in this article are those of the author and do not necessarily reflect the positions of American Liberty News.
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biden caused all this schitt! F J B!!
Funny how Medicare and S.S. are called entitlements while welfare and Medicaid aren’t. We paid for Medicare and S.S. and they are not entitlements but Medicaid and welfare sure are. Welfare and Medicaid cost more then Medicare and S.S. they just like to play games as to what the call it. Just like Obama put hundreds of those immigrants in and put them on S.S. so it wouldn’t swell the welfare rolls so high. Even not counting all the welfare payouts we still have a count of 24 trillion.
It is time for the Federal government to learn how to manage their checkbook just like the rest of us. The debt is already so large that it can never be paid off. Time for Washington to get serious and balance the budget. No more treating the budget as if it is a bottomless money pit.
Quit blaming republicans when we all know it is the democratic socialist communist party
Yeah, right Norman! Doesn’t have a damn thing to do with the tens of trillions of dollars being printed that Biden signed into law, as he destroyed our economy and our energy Independence. Now would it!
I Blame RNC DNC DC Estd for mess were in
So the Republican’s silliness of trying to have a balanced budget and reign in spending is what caused the downgrade?
Treasury Secretary Janet Yellen’s decisions are “arbitrary and based on outdated data.”