cross-posted from the Oregon Tenth Amendment Center
Did we just have a Tea Party downgrade?
Of course the Mainstream Media (who like to call upon the government in general, and the Federal govt specifically, to solve every issue in Society) will tell you that the Tea party, with their intransigence towards any sort of tax increase, have caused the debt of the United States to be downgraded. I would ask any person who buys that mantra over to my personal bridge in New York (I’ll make you a great deal, and you can charge tolls to people who cross to pay for it). Seriously though, I have one thing to say… 16.7 trillion. That number does not even include unfunded liabilities! Some countries have been called basket cases for much less in debt relative to revenue.
The thread of truth behind the ridiculous assertion…
S&P (the ratings agency that downgraded us) specifically mentioned the debt debate and the reluctance/refusal to entertain any tax increases as a part of the solution – with this quote:
“Compared with previous projections, our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act. Key macroeconomic assumptions in the base case scenario include trend real GDP growth of 3% and consumer price inflation near 2% annually over the decade.”
Given the association of the Tea party with the Republican party ( clearly, with the recent deal in D.C. this is a false impression), some may say that this is a Tea party downgrade; but if you read the whole story it becomes clear that we have simply been so profligate as to make ourselves unable to merit an AAA rating.
The truth of why we are going to continue to get worse:
We have been living in a Keynesian fantasy world for the last 50-60 years. Anyone who looks at America’s spending vs. revenue for the last 100 years will see a change that has occurred. We spend until we reach the debt ceiling, then we raise the debt limit. Any serious look at our treatment of the debt ceiling harkens to the old Bugs Bunny cartoon where Bugs draws a line in the sand… it gets stepped over… and then another line… followed by walking past it. Our debt limit has been and still is today no limit at all. It is simply an exercise in parliamentary procedure, to give the impression that our political “servants” are really minding the store (while they clearly are not)!Details