We’re told that if the Congress and President Obama can’t come to an agreement to raise the debt ceiling, the credit agencies will for the first time downgrade America’s rating below the highest AAA designation. But one agency has already done that, and it has nothing to do with the debt ceiling. It’s because of the reason we need to up the credit rating in the first place — the federal government’s historic spending binge.
(Reuters) – Credit rating agency Egan-Jones has cut the United States’ top credit ranking, citing concerns over the country’s high debt load and the difficulty the government faces in significantly reducing spending.
The agency said the action, which cut U.S. sovereign debt to the second-highest rating, was not based on fears over the country not raising its debt ceiling.
Instead, the cut is due the U.S. debt load standing at more than 100 percent of its gross domestic product. This compares with Canada, for example, which has a debt-to-GDP ratio of 35 percent, Egan-Jones said in a report sent on Saturday.
That makes perfect sense. The United States government is not experiencing a fiscal crisis because it can’t borrow enough, but because it has borrowed way more than it can reasonably pay back. Seems to me that extending the credit limit — not refusing to do so — is a good reason to downgrade America’s credit rating. In all this talk about cutting this trillion or that trillion in spending over a 10-year time-frame, we forget that Obama’s “stimulus” was nearly $1 trillion alone — and it was flushed down the toilet in the span of one year.
Jeffrey Lord makes the point that should be obvious to Congress and the president:
This is serious. It’s no longer about cutting up the government credit cards. It’s about the Left as financial crack addicts. What John Boehner is doing — one hopes — is not negotiating but performing what drug and alcohol counselors refer to as an “intervention.”
Boehner appears to be doing just that — or as close as possible in modern Washington. But I have my doubts the Left and Obama will get on that plane to Promises in Malibu.
Regardless, remember that it’s not America’s ability to extend its credit limit — but its profligate federal spending — that imperils our AAA rating. Don’t be spun.