Standard & Poor’s, one of the major credit rating agencies in the United States, downgraded America’s rating from AAA to AA-plus, the first-ever downgrade of this country.
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(NOTE: This press release will be updated throughout the day on Saturday, August 6.)
“The fact that S&P downgraded America’s credit rating confirms what many policy analysts have known for some time — that entitlement programs Obamacare, Medicaid, Medicare, and Social Security are simply unsustainable in their current form.
“The recent debt ceiling agreement was a small step in the right direction. However, to improve our credit rating and restore America’s fiscal health, Americans need to elect a president and Congress committed to repealing Obamacare and instituting fundamental reforms of our entitlement programs.”
“The S&P downgrade of America’s debt vindicates the Tea Party’s position in the debt limit debate. Cut, Cap and Balance would have solved the problem by returning federal spending to the long run postwar historical average as a percent of GDP, which prevailed for 60 years, until the Obama Administration, and by balancing the federal budget, stopping the accumulation of more debt. But the Washington Establishment rejected the Tea Party solution for their non-solution.”
(Ferrara is the author of America’s Ticking Bankruptcy Bomb, released by HarperCollins in June.)
“This first-ever downgrade of the U.S. credit rating is the most direct rebuke yet of the Obama administration’s stubborn devotion to Keynesian economics and the Congress’ refusal to face up to economic facts. Government overspending and excessive regulation are strangling the economy, and without economic growth, the government’s promises to pay its ever-increasing debts are decidedly implausible.
“Unless taxes are cut significantly and unnecessary regulations removed, this credit downgrade will prove to be just the first of many humiliations and privations for the U.S. economy and the American people.”
“The downgrading of U.S. debt represents recognition that Congress has done nothing to alter the federal government’s move toward insolvency. Unless there are dramatic cuts in government spending, this downgrade will be followed by others. Given the government’s inability to control its spending, U.S. debt is headed for junk status.”
“It’s beyond me how anyone could believe problems caused by spending and debt could be fixed by more spending and debt. Yet, apparently, this is what most people who run this government believe.
“We are seeing the results of intelligence without understanding. Most people in high office know much but understand little.
“The problem was never the debt ceiling. The problem was the amount of the government’s spending and debt, and they just increased the amounts, making the problem worse. The credit downgrade merely acknowledges that fact.”
“The bond rating experts at S&P seem to be making a political statement, not an economic forecast. But they see the economic future of the United States as following the decline of Europe. The EU’s bond crisis is a possible leading indicator and such government bonds do not deserve AAA ratings.
“The S&P political statement is a lack of confidence the new super select committee created by the debt limit agreement. It will probably deadlock, fail to recommend budget cuts, and then the automatic cuts in discretionary programs will kick in. S&P knows this was tried in the early 1990s, and it failed then. It will fail again. Since everything already written into law is designed to fail, the AAA bond rating has to be downgraded.”
“The downgrade shows that we need even deeper spending cuts as well some serious reform of our tax system. Republicans and Democrats alike need to show they are serious about entitlement reform. In particular, we need to strongly consider entitlement cuts in the short term including adding a means test to Social Security and forgoing certain Medicare reimbursement increases.”
“Ironically, the downgrade of U.S. debt instruments by S&P may not cost America more in the short-run. Where else is there in the world to invest? Spain? Greece? I think not. But, at some time in the future, the U.S. will be called upon to own up to its lack of fiscal discipline”