Who's Really Downgrading America? By Patrick J. Buchanan
| August 10, 2011
The decision by Standard & Poor's to strip the United
States of its AAA credit rating, for the first time, has
triggered a barrage of catcalls against the umpire from
the press box and Obamaites.
S&P, we are reminded, was giving A ratings to banks
like Lehman Brothers, whose books were stuffed with suspect
subprime paper, right up to the day Lehman Brothers fell
over dead.
Moreover, S&P made a $2 trillion error in its assessment
of U.S. debt and used political criteria in making its downgrade.
All of which may be true. But none of which is relevant.
This downgrade is deeply deserved. For no one really believes
the United States is going to pay its creditors back the
$14 trillion it owes them, or the $21 trillion it will owe
them at decade's end, with dollars of the same value as
those that the United States is borrowing today.
In the last year alone, the U.S. dollar has lost 30 percent
of its value against the Swiss franc.
A Swiss citizen who exchanged francs for $100,000 in dollars
in June 2010 to buy one-year T-bills, then cashed those
T-bills in this June, would have gotten back $100,000 in
U.S. dollars. But those dollars would now be worth 30 percent
less in Swiss francs.
On "Meet the Press," Alan Greenspan insisted that
the United States is not going to default. Why not? Because
our debt is denominated in dollars, and we can print dollars
to pay off our creditors. Which is pretty much what Chairman
Ben Bernanke and the Fed have been doing.
With the dollar down 5 to 10 percent this year alone against
the world's more respected currencies, we are engaged in
what the Romans called coin-clipping – official stealing
from citizens and foreigners.
Why are the Chinese so upset?
Because they are sitting on more than $1 trillion in U.S.
bonds and Treasury bills bought with dollars we paid them
for Chinese-made goods, while the purchasing power of the
dollars that those bonds and T-bills represent withers away
every week.
"I believe this is, without question, the 'Tea Party
downgrade,'" says Sen. John Kerry.
How so? Because the Tea Party blocked the big deal President
Obama sought to cut with House Speaker John Boehner to resolve
the deficit-debt crisis.
The president, we are told, was prepared to accept $3 trillion
in reduced future spending for entitlements like Social
Security, Medicare and Medicaid, but the Tea Party caucus
refused to let Boehner agree even to $1 trillion in "revenue
enhancement."
But here, a question arises: If the president believes
entitlement reform is essential to get America's deficit-debt
crisis under control, why does he need Tea Party cover to
do his duty?
He doesn't. Tea Party intransigence on taxes is not the
reason for Obama's failure to cut spending. It is his excuse.
Indeed, if Obama announced tomorrow that he was going to
cut future spending on entitlements by $3 trillion to restore
our AAA credit rating, he would have the full support of
the Tea Party.
His opposition would come from Kerry's colleagues in the
Senate and Nancy Pelosi's in the House.
To see how absurd it is to blame Tea Party Republicans
for the downgrading of America's debt, imagine this scenario:
Rep. Ron Paul is speaker of the House, Sen. Rand Paul is
majority leader, and Rep. Paul Ryan is president of the
United States.
Does anyone doubt this trio would restore the U.S credit
rating in a New York minute? Every sacred cow in the federal
pasture, from food stamps to foreign aid, would be hanging
in the meat locker.
The American people have come to like the president, but
a majority is coming to believe he is simply not the decisive
president we need to lead us out of the morass in which
he found the country and from which he has failed to extricate
us.
"He made it worse!" is shaping up as the GOP
slogan for 2012.
If Obama wishes to restore the AAA rating of his country,
he might consider two separate and bold steps, both consistent
with his professed beliefs.
First, tell the Republicans that if they will not agree
to revenue enhancement, he will nonetheless do his duty
and pare back spending in the entitlement programs. He would
get instant GOP support.
Following this, he could go to the Republicans and tell
them that if they agree to eliminate the clutter in the
tax code – exemptions, loopholes, deductions –
he will agree to cut tax rates for individuals and corporations
alike, to make America more competitive.
Again, he would have the support of Republicans and the
Tea Party. It might even advance his re-election prospects,
if he could get renominated by his own party, which would
rebel at both reforms because they would mean a suspension
of the politics of tax and spend.
As for the S&P downgrade, again, the only surprise
is it didn't come sooner.