On Friday August 5, 2011, the United States government was rapped sharply over the knuckles by Standard and Poor’s, the credit rating agency. The agency lowered the government’s AAA rating to AA+ with a negative outlook. The U.S. had enjoyed a AAA rating for a period of 70 years. The rapped fingers of President Obama, Treasury Secretary Timothy Geithner, Senate Leader Harry Reid, and House Speaker John Boehner, will be smarting badly as I write this column. It is a moment of shame for all Americans.
The shame is of our own making. We have elected into office since 2000 two presidents unfitted by reason of low ability and unacceptably inadequate economic education for the responsibilities that they assumed. We have elected into office for many years members of Congress whose dedication is more to raising campaign monies through pork-barrel spending than to effecting sound policies for a nation in long-term relative decline.
The implications of this folly were publicized worldwide by the childish tantrums and humiliating lack of economic knowledge displayed by all major actors in the debt ceiling debate that took place on a world-wide stage through a period of three excruciatingly painful months.
The world well knows that budget cuts of $2.1 trillion problematic dollars spread over ten long years amounts to a non- response to a U.S. federal debt present value of some $100 trillion. S & P has simply reflected that reality. The sad truth is that the United States – as a consequence of its Constitution – is now locked into an 18-month policy paralysis, during which interest rates will rise, economic growth will be throttled and inflation will rear its ugly head.
In a parliamentary system, the government would collapse and new elections would be called. In the United States, no such reaction is allowed. The honorable reaction to news as devastating for the U.S. economy as that just recorded, would be for President Obama to dismiss his Treasury Secretary, Timothy Geithner, and then to resign his own position, allowing Vice President Joe Biden to succeed him. The honorable reaction would be for Harry Reid and John Boehner to resign their leadership positions, to allow successors more suited to economic crisis and debt reduction to emerge from their respective party caucuses. Senator Mark Warner (Democrat) and Representative Paul Ryan (Republican) would bring much-needed economic intelligence to the leadership of Congress.
But such responses are off the table in a Washington environment where inadequate political leaders stalk the Capital like Roman Emperors during the final corrupt years of Empire. For Washington has now morphed into a Rome, not of the glorious era of Senatus Populusque Romanus- SPQR – but rather of the last decadent era of its Imperial decline and fall:
“the greatest, perhaps, and most awful scene in the history of mankind.” Edward Gibbon, The History of The Decline and Fall of the Roman Empire.