What the fallout might be from the recent Fitch Ratings Service downgrade of the nation’s credit from AAA to AA+ is still to be determined. But the knee-jerk reaction from the Biden administration and others was Fitch’s reasoning was suspect, its timing bizarre and its motives questionable.
That’s to be expected from those whose political fortunes rely on steady flow of good news – or at least not bad news – but it’s less acceptable from those who have noted the nation’s fiscal house is a wreck, and the political class charged with fixing it is just this side of dysfunctional. (RELATED: GOP Debt Deal Already Needs Revisiting)
Michele Wucker writes in Barron’s that pushback against Fitch’s action:
…reflect[s] a particularly American tendency to believe that we are immune to a set of “gray rhino” problems: those that are eminently obvious, widely discussed, and can do massive damage if we don’t address them properly.
Wucker defined the “gray rhino” as:
…the massive two-ton thing with its horn pointed at you, stomping the ground and getting ready to charge — and, most important, giving you the chance to act. It’s the thing we avoid calling what it is, like the so-called “black” and “white” rhino species that in reality are both gray. Paying attention to the gray rhino — that is, working to head off the things we can see in front of us — would be a far better use of our time than retroactively spotting black swans.
And what would be those massive, horned beasts ready to charge…and giving us plenty of warning they are about to do so?
The usual suspects that have been percolating for decades: entitlement spending programs like Social Security and Medicaid. The political class knows these programs are among the biggest drivers of spending, even as the funds that sustain them are slowly drying up. It’s an insolvency crisis unfolding in slow motion right before our eyes. (RELATED: China’s Failing Economy May Spark War With US Soon)
And neither major party wants to address it.
But there are other hulking beasts out there waiting their turn to charge. Among them? One that’s getting bigger and angrier by the day: the interest payments Uncle Sam has to make on all that government debt. Debt service threatens to squeeze out other areas of federal spending – including quite a few that are bedrock achievements of the Biden administration. As the R Street Institute’s Philip Rossetti writes, the low hanging fruit for a Congress looking to shave a few billion dollars off the deficit could be Mr. Biden’s green energy subsidies:
The latest estimate of the IRA’s energy subsidies is $663 billion. Simply rolling them back would save about $66 billion per year—roughly 5 percent of the deficit. Other pre-IRA energy tax breaks are about $18 billion per year, which would save another 1 percent.
Of course, Congress could decide those subsidies are just too important to cut. That, Rossetti says, would require the worthies to “…either find other governmental programs to cut or take on the gargantuan political fight of entitlement reform.”
Good luck with that. The default position of some pols, of course, will be to repeal the 2017 Trump tax cuts, expand other taxes, and hope the burden doesn’t crack the economic like a pinata. Many more will simply soldier on, doing what they’ve always done: keep on borrowing.
There are tough decision to make. Politically dangerous, socially difficult…but they must be made. Soon. Or the next downgrade of America’s debt will come sooner, and hurt more than Fitch’s move earlier this month.
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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There’s only a couple or so handfuls of congressmen and senators who deserve to remain in office. The rest need to be voted out at the very next opportunity.
THAT’S what’s wrong with America, and how to fix it.
That’s commonly known as get their rascals out of there and put our rascals in.
Only the damn RNC Estd
Social Security is not an entitlement. I paid money into the Social Security trust fund for 40 years. You may argue about the annual cost of living adjustments and the rules governing distribution and the amounts but the program is not an entitlement. Raiding the trust fund for funding of other programs is the real crime.
Didn’t you know those that live off the backs of the tax payers are more important.
Seek and destroy rinos!
entitlement spending programs like Social Security, get it straight SS is paid by each working man or women paychecks not by the gov. or welfare.
don’t forget employers pay the same 6% into SS as the employee
It was made clear that the downgrade was a result of the MAGAs in congress, for the first time, refusing to increase the debt limit. To try and blame this on the Dems is just silly. It’s the Maga branch of the Republican Party that refused to raise the debt ceiling after they added almost 8 trillion dollars to the debt and raised the debt ceiling three times under Trump. This entirely on the MAGAs.
You really should not be spewing bald face lies ! You better look to YOUR beloved Democraps for all you are blaming on MAGA ! Your party is the problem…. They try to hide Billions and Billions in bills, just like now with Hawaii . They want to give Hawaii a Million or so for emergency fund and in the coverup send Ukraine 6 BILLION because Biden is being blackmailed for his crimes and Zelensky has all the goods on him. That is your Criminal party SIR !
Take a look at Pence’s plan for Social Security. It is one that seniors will support, and that younger tax payers also may consider, both because it will sustain and strengthen the program while decreasing future spending.
Mike Pence the traitor ! All propaganda, he will rob SS and not do anything. He has been bought and paid for !
YOUR opinion of being a traitor is irrelevant if the plan works.
We have the Biden criminal, Chucky Schumer, Mitch McConnell and Kevin McCarthy talking about the budget…… I know how THAT is going to go !
Amazing how they always call S.S. and Medicare which we pay for being the real problem but seldom ever mention welfare or Medicaid. Guess those that don’t pay for what they get are the hero’s of our society.