Moody’s Tells US: Put Your Financial House in Order
Posted on 08. Dec, 2009 by James Devere in Political News
On the eve of Obama’s trip to Denmark, in which he may announce new spending plans for developing countries, Moody’s is poised to send a warning that America’s triple-A credit rating is at risk. For generations the country has relied on deficit spending and the strongest credit rating to manage the country’s finances. This new chink in our fiscal armor is a direct result of the fact that our government faces a trillion dollar deficit for the next 10 years, and sends a clear message that Congress, the President and the American people must rein in deficit spending. A reduction in America’s credit rating can only lead to higher interest rates as the Treasury will have to make our debt more attractive to lenders.
The grumblings from Moody’s come at a time when Congress is poised to rubberstamp a massive healthcare plan that will increase spending by a minimum of $500 billion, and when the President and Congress are considering a new stimulus package. The fear of creditors is no different than that of mainstream America: Congress and the President are spending too much, too fast, in name of progress and the economy.
Past administrations have been faced with economic hard times and there are responses that are proven to work. Our current leaders have attempted to act in ways that, at each instance, fly in the face of free market policy. Deficit spending in itself is not necessarily a bad move in a troubled economy. What is hard to understand is how we have had an enormous spending bill that has not freed up the credit situation for the American public and small business, and how we have had a stimulus that has not created jobs.
We have allowed our leaders to authorize trillions in spending with TARP, stimulus, and healthcare. These bills will push generations of Americans into a global debt position and for what? Each bill, consisting of thousands of pages of documentation, is so targeted to social planning that the free flow of capital is strangled in governmental red tape. Job creation may happen under such a legislative burden but each job will come with a huge taxpayer price tag. Such a targeted approach will not create the small business job influx that has led the United States out of past recessions and only stands to help a select few.
Moody’s is not telling us anything that we do not know. America is not in a position to enact new entitlements or to throw money at the world’s problems. The first job of this Administration should be to get our economy on track. “Jobs First” should be the attitude of every administration, then and only then can we start to spend on new programs.
A wise President would shelve the current healthcare plan and work in areas of cost savings to taxpayers while reducing the tax burden of public and small business. I doubt, however, that the momentum for spending will be slowed. We will instead be told that the top priority of our leaders is to cut the deficit and put America back to work; empty words in the face of contrary actions, which at least one credit organization is beginning to see through.
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