Friday, July 15, 2011

Debt Crisis - #3078 - The Obama Downgrade - The Real Reason US Could Lose its AAA Rating - Wall Street Journal (2) The Fight for the Balanced Budget Amendment - Heritage Foundation

So the credit-rating agencies that helped to create the financial crisis that led to a deep recession are now warning that the U.S. could lose the AAA rating it has had since 1917. As painfully ironic as this is, there's no benefit in shooting the messengers. The real culprit is the U.S. political class, especially the President who has presided over this historic collapse of fiscal credibility. Moody's and the boys are citing the risk of a default on August 2 as the proximate reason for their warning. But Americans should understand that the debt ceiling is merely the trigger. The gun is the spending boom of the last three years and the prospect that Washington lacks the political will to reduce it in the years to come. On spending, it is important to recall how extraordinary the blowout of the last three years has been. We've seen nothing like it since World War II. Nothing close. 

The nearby chart tracks federal outlays as a share of GDP since 1960. The early peaks coincide with the rise of the Great Society, the recession of 1974-75, and then a high of 23.5% with the recession of 1982 and the Reagan defense buildup.  Read more........ Steve Peters:   OK let's see if I understand what has happened. Obama and the Democrats have spent very dime we have, and borrowed trillions more to be paid for by future generations. Federal spending is up by over 25% since Obama took office. Now they refuse to reduce any spending, and want they American people to raise the amount of money they can borrow by trillions of dollars more. Obama says if the GOP does not compromise and give him what he wants, he will take is case to the America people......go ahead make my day!  Article contributed by Steve Peters.

The Fight for the Balance Budget Amendment - Heritage Foundation - Washington remains embroiled in debt limit negotiations as Republicans and Democrats stand apart on how to best go about increasing the amount of money the government can borrow and spend. But on the sidelines, another debate simmers over one amendment to the U.S. Constitution that could have averted today’s spending debacle: the balanced budget amendment (BBA).  At its core, the BBA would mandate that Congress not spend more than its income–a notion that would truly be a radical departure from today’s course of business in the nation’s capital, where the national debt could eventually reach a staggering 344 percent of GDP by mid-century.  You might think that putting constitutional limits on Congress’s ability to borrow and spend beyond its means is an idea whose time has come. If so, you’d be in good company. In 1798, Thomas Jefferson, the great author of America, wrote that he longed for such a constraint:  Read more.......

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