A convoluted web of serious problems has converged, all due to decades of treating the government as a vending machine. Each issue has a simple solution.
Ratings agencies are threatening to “downgrade” US bonds from the current AAA rating. This is not contingent on the debt ceiling being raised. This problem relates to our excessive debt with the solution to be drastic spending cuts. Based on current reports, unless an excess of $4 trillion in spending cuts occur, Standard & Poors and Moodys will be lowering our ratings.
The debt ceiling has been reached due to excessive past and current spending but is related to defaulting on the service of American debt to lending nations, like China. America’s revenue will be adequate to service this debt and a few other spending needs like Social Security, but the request being made is to account for additional spending in the future and to avoid spending cuts.
The solutions proposed to date have included a Cut, Cap & Balance bill that passed the US House but was tabled in the Senate. That was the best solution with spending cuts, a cap on future spending and a proposed balanced budget amendment that the majority of Americans support.
The current proposal by House Speaker Boehner that will be altered slightly by Senate Leader Harry Reid cuts only $900 billion over ten years with a vague promise of future votes on balancing the budget. It creates yet another Washington commission that will produce another series of quickly ignored and forgotten recommendations.
Solutions? No, just timid proposals by politicians.
The common theme with these real problems is the need to make serious cuts in government spending. Congressman Connie Mack of Florida has the best proposal that remains. Make annual cuts across the board in all agencies in spending, a spending cap in place with $7.5 trillion in cuts that actually balances the budget by the end of this decade.
For all the drama, the real solution lies in cutting spending.