Uncle Sam's sinking credit
Posted: 9:55 PM, April 18, 2011Michael A. Walsh
Well, looky here: Hard on the heels of the House's passage of Rep. Paul Ryan's bold "path to prosperity" budget -- and just in time for the big debate over raising the nation's $14 trillion debt ceiling in order to keep borrowing money we don't have to keep funding "entitlement" programs we can no longer afford in their present forms -- along comes the credit-rating agency, Standard & Poor's, with a bracing dose of reality therapy.
The outlook on the country maintaining its long-term AAA credit rating is now officially "negative": "We believe there is a material risk that US policymakers might not reach an agreement on how to address medium-and long-term budgetary challenges by 2013," reported S&P. "If an agreement is not reached and meaningful implementation does not begin by then, this would in our view render the US fiscal profile meaningfully weaker than that of peer 'AAA' sovereigns."
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| No give: President Obama's made it clear he'll fight any real spending cuts. |
Translation: Unless Congress and the White House stop the fiscal shenanigans and get serious about cutting both the deficit (the year-to-year shortfall, now over $1 trillion) and the national debt (above $14 trillion and soaring), the "full faith and credit" of the United States is in danger of becoming an international joke.
There's plenty of blame to go around for the parlous state in which we find ourselves, starting with the lack of political will to actually do something about it. With the majority of the federal budget devoted to defense, entitlements and interest on the debt, politicians have been reduced to arguing around the edges over "cuts" that are either meaningless or downright illusory.
In the wake of news that the highly touted $38.5 billion in cuts in the recent 2011 budget deal actually yielded only $352 million in real savings this year, the Republican leadership is on notice that next time -- that is, the coming donnybrook over raising the debt ceiling -- it's going to have to deliver on promises of a smaller, leaner and more efficient government.
Meanwhile, President Obama -- who as a senator vehemently opposed raising the debt ceiling in 2006, but now says he was wrong -- signaled in his speech last week that he means to keep the spending pedal headed straight for the bankruptcy metal in flat-out pursuit of his social-redistributionist agenda.
In private remarks last week to donors at a Chicago fund-raiser that were inadvertently transmitted into the
White House press room, Obama complained of GOP efforts to chip away at his spending priorities, including ObamaCare -- then rhetorically asked Republicans, "Do you think we're stupid?"
Yet the battle between the makers and the takers simply must be sorted out, both philosophically and economically, if the United States is not to collapse under the weight of its good intentions, impossible promises and massive unfunded liabilities.
Liberal appeals to a "higher morality" that somehow dictates we must beggar ourselves in expiation for real or imaginary past sins ought to be given exactly zero weight in the national conversation that the S&P warning demands.
One way to get a grip -- unemotionally, intellectually -- on the problem doesn't even involve spending. According to IRS figures, nearly half of filers pay no income tax at all, while the top 5 percent pay nearly 60 percent of the total income-tax burden. This must stop.
It is not healthy for our democracy to have half the population with its hand out and no skin in the game.
Necessary and proper taxes ought to be the patriotic duty of every citizen.
And the whole tax code is obscenely complex. If we can't move to the Flat Tax or the Fair Tax (a national sales tax replacing the income tax), then we need something to make the thousands of pages of IRS rules comprehensible and fair. When the tax-compliance industry employs more people than Wal-Mart, UPS, McDonald's, IBM and Citigroup combined, there has simply got to be a better way.
The productive citizenry can longer be looked on as a milk cow. No one argues that there shouldn't be some sort of social safety net. What we ought to be discussing are its practical limits.
In the end, isn't that what real "fairness" is all about?
