- The Washington Times - Monday, April 18, 2011


Wall Street doesn’t believe Washington will get its act together and address the growing debt crisis. Markets tumbled Monday after the Standard & Poor’s ratings agency raised a red flag over the deficit, going negative on the outlook for the U.S. economy.

The gloom and doom are well-founded. America’s debt load has more than doubled as a percentage of gross domestic product in just the past few years, and market watchers see little hope of improvement. “More than two years after the beginning of the recent crisis, U.S. policymakers have still not agreed on how to reverse recent fiscal deterioration or address longer-term fiscal pressures,” explained S&P credit analyst Nikola G. Swann.

President Obama’s 2012 budget plan will make things worse. According to revised Congressional Budget Office figures released Friday, the big-spending blueprint would double the amount of debt held by the public from $10.4 trillion to $20.8 trillion over the next decade. Mr. Obama is so convinced that continuing to run up the tab in such dramatic style is going to “win the future” that he won’t even follow the lead of the Europeans - his source of inspiration for all of his other policies. France, Germany and the United Kingdom, for example, have already throttled back and implemented austerity measures that have trimmed deficits.

Here at home, the annual trillion-dollar overspending has left us with the worst debt situation of any country with a top-level AAA rating. S&P forecasts net government debt will grow to 84 percent of GDP by 2013, or as high as 90 percent if the economy turns sour. The ratings agency doesn’t believe the White House will come to an agreement with House Republicans who actually want to reduce the deficit. The president’s veto pen can thwart the GOP plan to make the first real spending cut in nearly 50 years, enact pro-growth tax cuts and reform entitlements. S&P believes realistically that the tough choices will be punted until after the 2012 elections.

That’s dangerous, as the problem only grows worse the longer we wait. If the GOP fails to hold the line, more than just America’s credit rating will suffer. The market is sending an unmistakable message that the country’s future economic growth depends on reversing the existing borrow-and-stimulate culture on Capitol Hill and in the White House. Without real change, poor will be the new American standard.

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