S&P are the only people in America who seem to get it: you can’t keep a rating you don’t deserve.
America is 300 million people all screaming:
“I want my goddamn million dollar tulips!!”
Although I guess in the America of “every kid gets a prize, even if they lose”, that S&P reality check sounds increasingly unfamiliar.
Oh, Ed Morrisey gets it too.
Please clip & save:
There is a lot of anger at the moment in the US over the embarrassment of the downgrade, as well as shock. I’m most amused by the shock, to tell the truth.
S&P didn’t say anything yesterday that was not common knowledge and common sense.
If you had to rate a potential investment that had an income of, say, $22,000 a year but had costs of $37,000 per year, a standing debt of $143,000, and contracted future debt that exceeded $1 million, would you give that investment a gold-plated AAA rating and buy their bonds at the lowest interest rate possible, or at all? Of course not, but that’s exactly the fiscal situation of the US, at a 100,000,000:1 scale.
The anger is mainly misdirected. The media wants to blame the Tea Party, but the Tea Party wants to solve the actual problem — overspending and overcommitment to entitlement programs. The Tea Party wants to blame the Obama administration, and it deserves some blame for refusing to address the real structural problems of the US fiscal condition. But that fiscal structure far predates Barack Obama, both as President and as human being, and Congresses and White Houses of both parties have done little to address the real problems in Medicare, Medicaid, and Social Security.
Why? Because as soon as people try to do so, demagogues accuse them of wanting to push Grandma over a cliff. Voters respond by punishing the reformers and rewarding the demagogues. If we collectively want to blame someone, we collectively should be looking in a mirror.
What do we do know? It’s time to acknowledge that Ponzi schemes don’t work, and that entitlement programs are destined for collapse under current parameters.
We can’t possibly tax enough to cover their costs; the problem in this case isn’t revenue as much as it is a lack of suckers on the front end of these schemes.
They worked when the worker-to-beneficiary ratio was 16:1, but not when it’s 3:1 or less.
Most Americans want a safety net for the elderly and the truly disabled, but in order to have that, we have to severely limit the pool of recipients to those who absolutely cannot work to support themselves, not to those who choose not to work to support themselves.
Retirement needs to be self-funded, or not taken at all. We also need to revamp public-sector pension systems that threaten their own tidal waves of default at the state level to get on top of our national liabilities once and for all.
In short, we need to grow up and realize, as Robert Heinlein once instructed us, that there really ain’t no such thing as a free lunch.