Credit agency not bullish on the U.S.


Maybe Standard & Poor's will succeed where the tea party movement failed.

The unequivocal message of November's elections was for Washington to get a grip on runaway federal spending and stop growing the national debt. In response, President Obama, Senate Democrats and House Republicans hailed a hard-fought compromise that trims barely a few billion dollars from a still-growing budget that has doubled over the past decade to more than $3.5 trillion.

With federal borrowing and debt obligations clearly threatening the health of the U.S. and world economies, Washington considers it progress to reduce the rate of annual spending increases. But even with such cosmetic surgery, next fiscal year's estimated budget deficit of $1.5 trillion will be a new record, sending the national debt soaring toward $16 trillion.

Message forgotten.

On Monday -- Tax Day, appropriately -- the key credit agency Standard & Poor's lowered the federal government's long-term fiscal outlook from "stable" to "negative," and warned that if Congress and the White House can't agree on immediate, drastic steps to limit deficit spending, Washington will lose its triple-A investment rating.

That step would make already stingy credit markets even tighter. If loans become even more expensive and less available than they are today, the country's timid recovery could return to recession.

The new message to Washington: Get serious about balancing the budget.

It "isn't simply a wake-up call, it's a loud warning signal that we need to act immediately to lower our debt," said Sen. John Ensign, R-Nev. "Increasing the debt ceiling means nothing if we continue to spend away our country's future."

Currently, the best Republicans say they can do is reduce deficits by $6 trillion over the next decade, which would still drive the national debt above $25 trillion. A balanced budget? That might take 30 years. And actually paying down the debt? Forget about it. As for Democrats? They seem content to accuse the GOP of seeking to starve the children, the elderly and the infirm, closing their eyes as we head toward the cliff.

Americans pay more than enough in federal taxes, though they do so through a needlessly incomprehensible tax code. Simplify the tax code; set rates that are globally competitive and encourage investment and economic growth. Slash the bureaucracy. Reform entitlements. Limit the federal government to functions outlined in the Constitution.

The 2012 elections are around the corner. Will anyone running for president be courageous enough to present a plan even bolder than Rep. Paul Ryan's "Path to Prosperity"?

Standard & Poor's is a new messenger with the same old message. Washington had better start listening.

 

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