Reckoning at hand; Washington must agree on cutbacks.
Amid stubbornly high unemployment, rising prices, seemingly endless wars, and natural disasters, it would be easy to conclude that the U.S. economy will need many more years to shake off its current lethargy. We happen to believe Americans are more resilient and optimistic than that, and that given half a chance, our ingenuity and work ethic have no equal on the planet.
The worrisome question of late, however, is whether Washington will give Americans that half a chance they need. Several economic warning signs this week indicate that Congress and the president simply cannot continue to put off difficult decisions on national spending.
Early this week, Standard & Poor's lowered its outlook for U.S. government debt from stable to negative. While that does not mean Uncle Sam's credit rating will necessarily slip from top-shelf AAA status, it does mean the agency believes there's at least one chance in three that Washington won't be able to tame its deficit problems. If that leads to a credit downgrade, the economic consequences could be dire, indeed. Foreign investors could lose confidence in buying U.S. government debt, and find other, more promising places to invest. Starved of the funds it needs, Washington would have no choice but to go on a crash diet.
Following the S&P announcement, the price of gold on Tuesday briefly topped $1,500 an ounce for the first time, another indication that Americans' faith in their currency has been deeply shaken.
To their credit, both the House and Senate have passed significant budget-cutting measures in recent days, at least for the current fiscal year, and the White House appears to have no choice but to sign on to that legislation. But the prospects for serious budget cuts over the next decade are very mixed, with reports that negotiations between the Obama administration and leaders in Congress are not going well.
Furthermore, there is still an air of unreality hanging over the nation's capital. The Washington Post reported yesterday that the administration had repeatedly urged Standard & Poor's in recent weeks not to make any move that would affect the nation's credit rating.
We understand that no one, least of all those elected to lead, wants to see this nation's reputation for fiscal stability and creditworthiness tarnished. But Washington has spent beyond its means for far too long, and both major parties have been complicit in that effort. The time has come to reconcile the books. Our nation's leaders have no choice but to put politics aside and tackle the difficult and necessary work of controlling spending. If they choose instead to continue to deny reality, the iron laws of economics will do the job for us, with much less finesse, and far more pain for everyone.
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|Publication:||Telegram & Gazette (Worcester, MA)|
|Date:||Apr 21, 2011|
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