In case you missed it, the United States lost its AAA credit rating for the first time in the nation’s history. Standard & Poors downgraded the US from AAA to AA+ with a negative outlook. The downgrade is expected to send interest rates climbing and stocks prices tumbling.
The rating bureau’s decision brought a sharp response from the White House. Ranking administration officials criticized Standard & Poors’ reasoning. They criticized their math. They criticized their professionalism. And they criticized their credibility.
What the administration didn’t do is criticize itself for allowing this to happen.
We have two sons. Both played organized sports. Baseball, basketball, football, soccer; they tried them all. As anyone who follows sports knows there are times when the outcome of a game is decided by a questionable call by a referee or umpire. Sometimes those calls go in your favor. Sometimes they don’t. When the boys would lose a game based on a ref’s call they would moan and groan about the injustice. They would complain about the ref’s incompetence; conveniently forgetting all the mistakes that their team had made during the course of the game; mistakes that if corrected would have made the ref’s call irrelevant. We would always tell the boys the same thing: “Never put yourself in a position where the ref can decide the game. Take care of business.”
The United States failed to take care of business. They put themselves in a position where the ref could determine the final outcome.
Standard & Poors did not put the United States in this position…the United States government did. S&P did not increase our debt to $14.6 trillion dollars. S&P did not shy away from addressing entitlements and revenues; the root causes of our deficit problems. S&P did not choose to hold our credit rating hostage for political gain; and S&P did not settle on a weak solution that did nothing to correct the problem.
The United States finds itself in this weak and embarrassing situation not because of an S&P downgrade, but because the White House failed to lead and Congress failed to govern.
The extent of the damage resulting from the government’s reckless behavior has yet to be determined. S&P has stated that it will have further announcements today. It is expected that several states and municipalities will also be downgraded due to their dependence on federal funding. The Dow is expected to open down 200 points.
This is only the beginning. If the government fails to craft a comprehensive long term plan to address the debt; further downgrades may be forthcoming.
The ref has made the call. There is no sense whining about it. The ref is not the problem. We are the problem.
We need to take care of business.