The Great American Bailout
April 21, 2011
The Great American Bailout
This past Monday, Standard & Poor’s (S&P) announced that it was cutting its outlook on the U.S. from "stable" to "negative," increasing the likelihood of a potential downgrade of America's credit rating This should be a dire wake-up call to Washington that the time is now to address federal red ink. For all of America’s greatness, it is embarrassing that the United States may become a credit risk.
As I travel across Kansas, I hear stories about how constituents have had to tighten their belts during these trying economic times. It perplexes me how some in Washington think that despite what average Americans are doing, the federal government can just continue ‘business-as-usual’: spending, spending, and more spending with little, regard to the bills and past-due statements collecting dust on the counter. I wonder how and why it is possible for Washington to be so blind to what has been referred to as the most predictable economic crisis in American history: the day foreign countries decide to stop lending to the United States and start sending out the collection agents.
By taking on more and more debt, the United States is putting itself in a dangerous position. We are embarking on ‘The Great American Bailout.’ When I was a child in 1970, foreign countries held 5% of the country’s $283 billion in debt. When I was a young adult in 1990, other nations held 19% of the country’s $2.4 trillion debt. And, as of last year, nearly one-half (47%) of all of the country’s $8.4 trillion debt was held by foreign countries. Washington is putting America at the behest of other nations by racking up the IOU’s; to allow so much debt compromises our sovereignty, our world status, and our economic freedom and liberty.
The United States is saddled with more than $14 trillion in debt, and in the upcoming few weeks Congress will be asked to expand our nation's credit card limit. load. As I have written before, the only way I could ever support another debt ceiling increase would be if there is a serious and meaningful compromise that makes substantial and real cuts to the deficit and debt. One option I have suggested is a balanced budget amendment, which the states would have to ratify. States have to balance their budgets, so too should Washington.
This goes beyond the balance sheets. Not only does excessive spending expand our deficits and add to our federal debt, but it also creates a climate of uncertainty for those who have the resources to turn our economy around. Job creators shy away from hiring new employees when higher taxes and more regulation to pay off the debt are just around the corner. Investors shy away from providing capital to entrepreneurs (who subsequently create jobs) when they are vilified and penalized through the U.S. tax system and asked to assume an ever-larger share of the debt burden.
America used to be a shining example of prosperity. However, now Washington is putting Uncle Sam in a position where he is embarrassed to show his face at the bank and to take the calls from the collection agencies.
America cannot afford for Washington to hit the snooze button one more time. Let's hope this is the final wake-up call overspenders and excessive borrowers need before realizing that they have put America in a compromised position.