The Standard and Poor’s ratings agency has sent shock waves through our whole economy. Overnight, our rating was dropped from “stable” to “negative,” effectively telling our government to get control of our debt problem or no one is going to loan us money at a reasonable rate. Not China, not anyone.
Published on: 10:46AM Apr 25, 2011
It is no different than a small business or farm. If you keep borrowing, you can reach a point where the bank just says, “No, we can’t loan you any more money.” You can look for other sources of funding. Maybe you can find it at a much higher interest rate. Greece, because of that country’s debt load, is paying twice the going interest rate for money.
A lot of people are saying the action that S&P has taken is terrible and unjustified. I say, go for it. I like it. This puts more pressure on our government officials to get serious about our debt.
The situation that we face leaves only two choices. Raise taxes to get the money, or just stop spending so much, or both.
Since we’ve just filed our taxes, I don’t think we are excited about paying more. However, our tax code is so complicated and full of loop holes that it needs to be simplified and in that process we can surely find some money that has been slipping through the cracks -- maybe quite a bit of money.
The most obvious place to deal with our debt is spending. Money just gushes out of this government. We can’t help ourselves. Let’s fight another war. Let’s build another nation. Let’s rule the world. Look around at all the needy people. Let’s give them some money. We’re a rich country. At least, we used to be. Let’s guarantee food for everyone. Let’s build affordable housing. Let’s provide health care. Cradle to the grave care – that’s our goal.
Well, we can’t afford to throw money at every real or perceived need. It just breeds dependency anyway. We made a mistake. Our entitlement programs are more generous than we can afford.
Across the country, the American people are demanding reform. In this town, the House Republicans have taken the lead with their 2012 budget proposal. President Obama is trying to play catch-up. He doesn’t want to skinny down the government, but he’s going to be forced to do just that.
In closing, I would encourage you to access my website which archives my radio commentaries dating back 10 years and will go back 20 years when complete. Check on what I said back then. Go to www.johnblockreports.com.
Until next week, I am John Block in Washington.