Standard & Poor's decision to change the nation's long-term credit outlook from stable to negative should be seen as a wakeup call to Congress and the White House that we simply must find a credible solution to the fiscal crisis, and soon.
This is not strictly a domestic issue. Our government's credit worthiness underpins the world economy. Foreign governments invest trillions in U.S. debt instruments because they believe our credit is good. The mere possibility that Congress will not extend the debt limit is enough to send shivers throughout the world financial system. The prospect of losing our credit worthiness in the not too distant future is even more disconcerting.
Our ability to borrow vast sums of money at reasonable rates -- and the acceptance of the U.S. dollar as the world currency of choice -- confers upon us innumerable advantages. If we let these advantages slip away, the cost of credit will be higher, economic growth will be slower and our standard of living will be reduced.
The reason for S&P's change in outlook is not hard to understand. Our government is spending much more money than it takes in. Roughly 40 cents of every dollar that Uncle Sam spends is borrowed. We have had back-to-back deficits of $1.5 trillion and have almost reached our self-imposed debt limit. In the absence of a credible debt reduction plan, Congress may not be able to summon enough votes to raise the debt limit. If that happens, no one will need S&P to question our credit worthiness. It will be gone with the wind.
The budget plan offered by Rep. Paul Ryan (R-WI), Chairman of the House Budget Committee, was politically bold in that it proposed real reductions in entitlement spending. There is no question that is where the real problem is. Spending as a percentage of GDP has grown from 19 percent in 2000 to 25 percent of GDP in 2010, and almost all of that was due to the growth of Social Security, Medicare, Medicaid and Defense. Any viable solution will of course include increased revenues, but there is not enough money in the world to plug that hole. Spending is the central problem that must be dealt with.
Two bi-partisan deficit commissions, including the one created by President Obama, also made serious recommendations to reduce the deficit. One can quibble about specifics, but they did put everything on the table. Instead of criticizing Ryan, President Obama should focus on the recommendations of his own deficit commission. We need leadership to define the tough decisions that must be made and bring us all together to do what must be done. We urge the President to provide the leadership the country so urgently needs.
Jerry Jasinowski, an economist and author, served as President of the National Association of Manufacturers for 14 years and later The Manufacturing Institute. You can quote from this with attribution. Let me know if you want to talk to Jerry.
How do you bull stuff us, let me count the ways. The Ryan budget isn't bold it's a partisan hack job. It only goes after the other guys' stuff. Further, all of the items slated to be cut were essentially in the same budgets that were balanced when Bush took over. Thus none of them led to the deficits. What isn't included in Ryan's budget is the increased military spending, tax cuts, wars, corrupt crony contracted privatization schemes and the unfunded Medicare Part D with its no compete clause for drug companies. These are the items that led to the structural deficits and none have been addressed by the Republicans or Obama.
As to entitlement spending Social Security has run a surplus. This was essentially stolen to fund the tax cuts showered on our wealthy elite. In fact the Federal Government owes Social Security $2.5 trillion. This is why Republicans want to kill Social Security so their wealthy patrons don't have to pay it back. Medicare is insolvent because healthcare in general is insolvent. Obama failed to bring about needed reforms. Only through competition with a Public Option will private insurance companies be brought to the bargaining table in earnest. Only then can costs be contained and solvency of all health care can be assured.
Now defense spending is a different thing. When the Cold War ended, our defense capability should have been decreased. I'm sure I don't need to tell you that we can destroy the whole world many times over. Once ought to be enough and perhaps a tad too much. How about farm subsidies for Agri-business? How about tax breaks for oil companies that are making world record breaking profits?
So what are your thoughts on US Manufacturing Companies moving production to Low Cost Countries? There was lots of this going on during your tenure.
So don't you think that coupled with the Economic downturn the loss of good paying Manufacturing jobs have had an effect on the need for so called Entitlement Programs?
Tell us your opinion on major manufacturing companies paying Zero in taxes?
So we have large manufacturing companies which lets face it, are the companies that you really advocated for, are moving jobs overseas and paying almost nothing in taxes and you think we need to quit helping needy people?
Shame on you. But since your article is complete Republican Propaganda, I can tell you have no shame.
Half the people in the world live on $2 a day or less, but clearly you would rather keep a monopoly in the US - one that will deprive the people in the rest of the world of an opportunity to actually make a little money.
America has an obesity problem but they resent others getting jobs that might actually allow them to keep their families from starving.
Shame on YOU. You'd let thousands die so you can have your fat union jobs and your subsidized ethanol. I can tell you have no shame.
Are you really Singing the praises of US corporations moving production out of the US and leaving many here unemployed, because they are now exploiting workers in Third World countries, with sustenance only wages, zero workers safety standards and massively dangerous pollution records?
US Corporations are not doing anyone a favor by setting up shop in their town.
And the 'Might actually allow them to keep their families from starving' comment is especially laughable. Many of these people would have been able to feed their families just fine except these same companies have poisoned their rivers and lakes, or stole their land for another factory or parking lot.
So are you OK with losing your job or maybe a close friend or relative losing their job so they can move it overseas and thus feed others while You and Yours lose your homes and your retirement. And the Rich still get richer?
Here is a link to the analysis of downgrade of Standard & Poor's, along with some questions we ask, to learn from these mistakes now and that will not happen again:
http://blogjaviervega.blogspot.com/2011/04/why-standard-poors-would-downgrade-us.html
Greetings.
Military spending needs to be cut, an alternative minumum tax for corprorations must be instituted (as we saw with GE's 14 Billion in profits and ZERO taxes owed legally). Tax deductions for the top 5% of income earners must have a maximum percentage allowable, Military Spending the current 4.7 or 4.8% is 70% higher than nearly every industrialied nation, France spend around 2.5% Germany spends 1.4%...
Social Security shooule be kept seperate and not usable by the Treasury as a Governmental Pawn SHop...or they can pay REAL Interest rates instead of the absurd .65% they do now, with borrowed money.
So far Obama's plan is a absolute joke, pushing EVERYTHING off for another 8 to 10 years....and RYAN's plan is equally dumb...start with the Tax COde for COrporations and the MIlitary Budget...then this FALL do the rest, not in 5 more years...
SHort of this happening, the USA will become JAPAN...broke for 20 years in a hole it can NEVER get out of..
Ones interests seemingly eclipse ones backslidin¬g values.
We have mid and long term concern.
The real difficulty is lies with folks, trying to make the "demos" believe all the options have been put on the table. The result of that disingenuo¬us narrative reveals the full-scale immunity vested in elites.
Get real...the autocracy'¬s offers haven't even scratched the surface of divvy-up the sacrifice.
...bi partisan debt commission¬? Pa leeze.
For that reason it is imperative that government put real improvements in spending our dollars before we cut any taxes. Indeed even with the debt going sky-high Obama already has passed 800 billion of tax increases and is clamoring like someone is still ripping off government.
People in America want more value for their money and they want real improvements before going to the revenue pot once again. Those that do not, are ideopgues or have not done some work as to how dismal the return on government spending has been.
We increased unemployment insurance because people needed that. But compared to how much more spending has ensued beyond that, no one with a straight face can say that government is doing a good job.
Where to cut? Cut the G/A across the board, remove indexing and keep the programs in place if people cannot even give a little.
Most of us as children were taught to heed warning signs like the Mr. Yuck symbol. Apparently our politicians missed this training.
“ The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies.
Over the past 5 years, our federal debt has increased by $3.5 trillion to $8.6 trillion.That is “trillion†with a “T.†That is money that we have borrowed from the Social Security trust fund, borrowed from China and Japan, borrowed from American taxpayers. And over the next 5 years, between now and 2011, the President’s budget will increase the debt by almost another $3.5 trillion..
And the cost of our debt is one of the fastest growing expenses in the Federal budget. This rising debt is a hidden domestic enemy, robbing our cities and States of critical investments in infrastructure like bridges, ports, and levees; robbing our families and our children of critical investments in education and health care reform; robbing our seniors of the retirement and health security they have counted on.
Every dollar we pay in interest is a dollar that is not going to investment in America’s priorities.â€
Senator Barack Obama
Saying that the "specifics" are "quibbles" is to whitewash the fact that a large part of increased government spending is health care costs that continue to spiral out of control - not Medicare's/Medicaid's fault for existing as so many of our politicians would like to fool us into believing. It seems that the medical industry and their insurance cohorts truly feel entitled to having everybody that walks through their doors hand them blank checks.
I do however commend the sentences about increasing revenue and calling for leadership from our politicians. But if I was a school teacher grading this paper, I'd give it a "C-" and tell the student to rewrite and then resubmit it. This time though, talk about ending subsidies for oil industries that really don't need it, corporations that pay near zero in income tax, stop dumping suitcases of cash at a corrupt Afghanistan ruler's feet, and how Wall Street is letting unregulated speculators and derivatives run us into the ground. Not to mention those defense contractors that also like government blank checks.
But, before that even, talk about how jobs need to be "job one."
It does seem that if they believe their position, they should be asked to make good the nation's losses accrued from the financial communities' financial hanky-panky.