(Mike Chamberlain/The Cranky Hermit) – WSJ:
So the credit-rating agencies that helped to create the financial crisis that led to a deep recession are now warning that the U.S. could lose the AAA rating it has had since 1917. As painfully ironic as this is, there’s no benefit in shooting the messengers. The real culprit is the U.S. political class, especially the President who has presided over this historic collapse of fiscal credibility.
Moody’s and the boys are citing the risk of a default on August 2 as the proximate reason for their warning. But Americans should understand that the debt ceiling is merely the trigger. The gun is the spending boom of the last three years and the prospect that Washington lacks the political will to reduce it in the years to come.
Be sure to look at the chart accompanying the piece. Spending has increased from less than 20% of GDP just before President Obama took office to more than 25% of GDP this year. That is a more than 25% spending increase.
The administration and their allies would like you to believe this was a result of spending necessary to deal with the recession. It is not some temporary increase, however, but a permanent rise in the baseline of federal spending. According to Obama’s own budget projections this increase is permanent.
At the press conference today, the President claimed that $2.4 trillion in spending cuts over the next ten years would be too drastic. This after the increases he has imposed add up to more than $15 trillion over that same period. ObamaCare alone will add nearly a trillion over that same period of time and he has declared that off-limits.
Obama has used this debt-ceiling crisis as a political tool. He presents no plan of his own while demanding one from Republicans at the same time he criticizes, demagogues and fearmongers plans the GOP has already proposed. This is not leadership. As the WSJ editorial states, the reason we are at this precipice is because Obama has driven us there.
We’ve said we think it would be foolish of Republicans to walk into Mr. Obama’s debt-limit trap and let him blame them for the financial fallout, including a possible credit downgrade. But this is not because we think they will deserve the blame. Even if this debt-ceiling crisis passes, the threat of a credit downgrade will continue and grow until Mr. Obama changes his policies, or Americans change Presidents.