Thomas Sowell’s latest column points readers toward the source of Standard & Poor’s unease about the federal government’s debt levels. Hint: It’s not the debt-limit dilemma.
Why was there a financial crisis in the first place? Because of runaway spending that sent the national debt up against the legal limit. But when all the big spending bills were being rushed through Congress, the Democrats had such an overwhelming majority in both houses of Congress that nothing the Republicans could do made the slightest difference.
Yet polls show that many people today are blaming the Republicans for the country’s financial problems. But, by the time Republicans gained control of the House of Representatives, and thus became involved in negotiations over raising the national debt ceiling, the spending which caused that crisis in the first place had already been done — and done by Democrats.
Had the Republicans gone along with President Obama?’s original request for a “clean” bill — one simply raising the debt ceiling without any provisions about controlling federal spending — would that have spared the country the embarrassment of having its government bonds downgraded by Standard & Poor’s credit-rating agency?
To believe that would be to believe that it was the debt ceiling, rather than the runaway spending, that made Standard & Poor’s think that we were no longer as good a credit risk for buyers of U.S. government bonds. In other words, to believe that is to believe that a Congressional blank check for continued record spending would have made Standard & Poor’s think that we were a better credit risk.
If that is true, then why is Standard & Poor’s still warning that it might have to downgrade America’s credit rating yet again? Is that because of the national debt ceiling or because of the likelihood of continued runaway spending?
