Posted on 08/21/2023 5:47:54 AM PDT by Diana in Wisconsin
Fitch Ratings downgraded the US credit rating from AAA to AA+ because they expect fiscal deterioration over the next few years. While the diagnosis seems delayed, they’re right. Irresponsible bipartisan spending for decades is the culprit. With the national debt approaching $33 trillion, the American economy appears unlikely to recover its AAA status any time soon.
Republicans and Democrats have consistently increased spending more than tax revenues, leading to massive debt and unsustainable deficits.
Increased spending under President Biden made a dire situation even worse. For instance, in just five weeks since suspending the debt ceiling, the deficit rose by $1 trillion. Inflation soared once the current administration took office, and still hasn’t leveled off. Real wages are just now catching up with inflation after falling behind for more than two consecutive years. The US dollar’s value has waned.
America is not a safe investment, thus the downgrade.
Fitch Ratings predicts slower economic growth in the coming years due to high regulations, increased taxes, and demographic changes affecting productivity and population. This slower growth means less tax revenue for the federal government. Also, mandatory spending on Social Security and Medicare, which make up the bulk of federal spending, is projected to grow rapidly, contributing to rising deficits that will soon have just net interest payments exceed spending on national defense.
Americans can expect their wallets to be tangibly affected soon.
The downgrade will contribute to even higher interest rates than otherwise, which will have a domino effect on various aspects of the economy, including the stock market. Unless severe corrective measures are taken, the situation will likely deteriorate further, impacting people’s prosperity and perpetuating a debt and stagflationary situation.
The government should focus on fiscal responsibility and better budget management to avoid a deepening spending crisis, exacerbating Americans’ existing economic burden.
First, an approach of zero-based, performance-based budgeting should be implemented throughout the government to identify and eliminate ineffective programs.
Second, independent audits by private entities of government spending for programs would provide transparency and guide decision-making regarding which programs to retain, modify, or cut.
Third, but likely most important, implementing a fiscal rule that has worked at the state level, such as population growth plus inflation for a maximum budget growth rate, could cap the government’s debt accumulation and support more economic growth. Had such a rule been adopted over the last two decades, the national debt increase would have been significantly lower, by just $500 billion instead of the actual $19 trillion, allowing for better debt management.
The US credit downgrade should be a sobering wake-up call that urges Congress and the administration to prioritize fiscal responsibility.
As the nation faces economic challenges and increasing debt burdens, it is crucial to adopt prudent measures to put America back on a path to prosperity. Only through concerted efforts to control spending, implement effective budgeting practices, and consider the long-term economic impact of policy decisions can America chart a sustainable and prosperous course for the future.
Otherwise, buckle up. It’s going to be a bumpy ride.
Yeah, we’re not supposed to believe our lying eyes.
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Both parties love big government. Its their 'thing'.
I am going to make a prediction. Economic collapse. I am going out on a branch here and saying the gazillions of dollars in debt will never be repaid.
Voters love big government.
The US government will always print dollars (inflation) to return to bond holders if the US tax payers cannot be sucked dry for payments to liberal dreams.
Could payments be delayed by political strife, because the two party system has broken down, absolutely. I do think it wise the credit agencies do have a better rating for the non inflation creation crowd.
The state of Indiana with a cash surplus because of inflation in the billions and year very low interest bond payments many factors smaller should have a better credit rating than T-Bills and the printing machine. The feds use 15-25% of their budget (and the press) to support the national debt, the states with it on the ball may use 3%-5%.
Deep State may be thinking that if can’t stop Trump from being elected, them the next best thing is leaving him a wrecked, smoking hulk of a ship of state to save.
And they’ll be doing their damndest to encourage the public not to support what Trump will need to do to right it.
I hope we as a nation have the will to support Trump.
“I hope we as a nation have the will to support Trump.”
^THIS^ *BUMP*
It is my opinion that Trump is starting to garner the support of even formerly Democrat-aligned people, because of the crassness of the persecution launched against him. People understand what's going on, and their fundamental sense of justice kicks in.
That certainly seems to be true.
Voters like the idea of government largesse and somehow see it as coming from a vast pool of magical money that’s being paid for by someone else. They also don’t seem to mind having unelected bureaucrats run their lives. A giant, freedom crushing administrative state is strangely accepted without concern.
The bigger government gets, the smaller the people become.
Not sure about that. I worked around lots of Democrats; they are generally OK with ANYTHING that maintains their political power. They talk a lot about principles but in practice don’t care about them. With them, its all about control.
If anything, the creditors are still putting a good face on it. AA+ is not a terribly risky investment if it were corporate bonds.
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