Freedom Line Blog

Below is one of the latest cartoons from two-time Pulitzer Prize-winner Michael Ramirez.

View more of Michael Ramirez’s cartoons on CFIF’s website here.

Ruth Marcus focuses on the silver lining surrounding Standard & Poor’s downgrading the United States’ credit rating:

The more shake-’em-up warnings that could prod the political system into action, the better. From the Obama administration’s point of view, you don’t want the financial markets overreacting to the news and therefore making economic matters worse – hence Treasury Secretary Timothy Geithner’s round of interviews saying that S&P was overly gloomy about the prospects for political agreement. At the same time, as long as the markets remain reasonably calm, as appears to be the case, the administration is happy to have the political classes riled up. Problem is, the administration has different messages for the two audiences but only a single microphone. (Emphasis added)

In this case, the Obama Administration isn’t suffering from a lack of transparency – it’s deleterious contradictions are all-too-easy to see as it walks America’s financial future right off a cliff.

Standard and Poor’s spooked markets and sent news rooms scrambling today with its decision to downgrade the long-term outlook for the U.S.’s credit rating to “negative” from “stable.”  In a statement released this morning, the ratings agency wrote:

Because the U.S. has, relative to its ‘AAA’ peers, what we consider to be very large budget deficits and rising government indebtedness and the path to addressing these is not clear to us, we have revised our outlook on the long-term rating to negative from stable.

We believe there is a material risk that U.S. policymakers might not reach an agreement on how to address medium- and long-term budgetary challenges by 2013; if an agreement is not reached and meaningful implementation is not begun by then, this would in our view render the U.S. fiscal profile meaningfully weaker than that of peer ‘AAA’ sovereigns.

The White House swiftly responded, calling the decision a “political judgment” with which it disagrees. 

Really?  The national debt is more than $14 trillion and climbing.  The federal government borrows more than 40 cents for every dollar it spends.  Entitlement spending is spiraling out of control.  And last week, the federal government was within minutes of shutting down because President Obama and Congressional leaders were haggling over what ended up being a paltry few hundred million dollars in spending cuts from this year’s projected $1.65 trillion deficit. 

While the credit outlook downgrade is being reported as a surprise, it shouldn’t surprise anyone. All S&P has done is acknowledge the obvious.  Let’s hope President Obama and Congressional leaders get serious about doing the same.