For years, talk has swirled about the ever-growing national debt.
For many of those years, it was just that – political rhetoric in an effort to sway voters right or left. But the days of it being merely politics is quickly drawing to a close and the feeling that the United States has reached its credit limit is prevalent. And neither the Obama administration nor Congress is doing enough to address the problem.
The writing has been on the wall for quite a while. Early last year, China sold more than $30 billion of American bonds, signaling their loss of faith in the U.S. government’s ability to repay the bonds.
However, that hasn’t stopped the U.S. government from being able to obtain debt at will; China even continued buying them and holds more than $1 trillion in U.S. Treasury bonds. At a time that the U.S. government is urging citizens to watch their debt carefully as the worst recession since the Great Depression begins its slow recovery, Washington is ignoring their own words and racking up the debt.
The first domino has fallen regarding the U.S. debt crisis. Standard & Poor’s (S&P) is one of the biggest credit-rating agencies in the world; that is, they rate how well an entity’s credit is doing, be it a national government or private corporation. There are a variety of ratings, from D to AAA (the very best). The U.S. Treasury bonds have always been, and continue to be, a AAA investment. S&P also publishes economic outlook to go along with the ratings.
Last Monday, for the first time in the more than 20-year history of these outlooks, the U.S. outlook has dropped from stable to negative. This doesn’t do much presently but is a warning, which came across loud and clear.
S&P issued a written statement on Monday as well, stating that if the U.S. doesn’t take serious steps toward resolving the imminent debt crisis soon, their rating could drop. This would raise interest rates and, effectively, the debt even further.
Washington has wasted no time in response. U.S. Secretary of Treasury Tim Geithner immediately went on record to reassure our creditors that our debt was secure – and, really, that was about it.
Granted, the debt problem is not something that could be solved in a week, much less overnight. But this is something that Congress and all of Washington needs to stop pushing back to the next office-holder. They need to address the problem.
The battle lines are being drawn quickly. While a couple of weeks ago the battle was over the budget, a battle over the debt is approaching rapidly. It is because President Obama has urged Congress to raise the debt ceiling, to let the U.S. borrow even more money and to inch its way closer to potential default.
This may be the one time the Republicans’ penchant for saying “no” might come in handy. The simple fact of the matter is that the U.S. debt is growing at an unsustainable rate, and even if we allow it to grow, to stave off an economic recession (as says President Obama) – when the U.S. finally defaults – the economic consequences of the failure of the largest economy will be far worse.
Unfortunately, both parties have shown themselves to be completely irresponsible with money. Whether spent on welfare or missiles, spending is spending, and all of it needs to be brought down. The U.S. hasn’t had a budget surplus in over a decade, and the debt is America’s greatest weakness. It could be the crumbling point of a proud nation. It’s time for lawmakers to follow their own rhetoric, meet up, work together and control the American debt.