The political brinksmanship of recent months highlights what we see as America’s governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy. Despite this year’s wide-ranging debate, in our view, the differences between political parties have proven to be extraordinarily difficult to bridge, and, as we see it, the resulting agreement fell well short of the comprehensive fiscal consolidation program that some proponents had envisaged until quite recently. Republicans and Democrats have only been able to agree to relatively modest savings on discretionary spending while delegating to the Select Committee decisions on more comprehensive measures. It appears that for now, new revenues have dropped down on the menu of policy options. In addition, the plan envisions only minor policy changes on Medicare and little change in other entitlements, the containment of which we and most other independent observers regard as key to long-term fiscal sustainability.
Gasbag politicans are already emanating noxious fumes, blaming the other side, S&P, anyone but themselves for the sinking financial condition of the US – primarily for short-term, partisan political gain. I’m so glad they’re putting the good of the country first.
Tim Geithner, April 2011. “No risk of a downgrade.”
And S&P can’t add, apparently. They were off by $2 trillion in their numbers. No word as of 10 PM Friday whether this will make a difference.
Our country is run by clowns, liars, and idiots.
PS “The U.S. government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone,” says China, our biggest creditor.