BY MALIA HILL – Well that didn’t take long. Our nation’s spending has increased so much over the past decade that a showdown (like the current one over the debt ceiling) was pretty much inevitable. It’s interesting to note that though the claim that we would have to cut spending by 44% to balance the budget sounds scary, it actually just means scaling us back to 2003 levels. That’s not exactly the olden times when phone calls were a nickel and we had to walk to school in the snow.
Few things demonstrate the great contrast in economic policy like a debt/budget fight. Because (as dull as these things can sound when reduced to charts and dollar figures on the evening news), what we’re really witnessing is a dispute over economic philosophy and the direction our country will take for the foreseeable future. Consider this comment from Moody’s (which has made quite a few appearances in this space on the issue of credit and bond ratings):
“If the debt limit is raised again and a default avoided, the Aaa rating would likely be confirmed. However, the outlook assigned at that time to the government bond rating would very likely be changed to negative at the conclusion of the review unless substantial and credible agreement is achieved on a budget that includes long-term deficit reduction. To retain a stable outlook, such an agreement should include a deficit trajectory that leads to stabilization and then decline in the ratios of federal government debt to GDP and debt to revenue beginning within the next few years.”
To pass through this crisis without looking towards a long-term resolution is merely to pass the burden of our wasteful spending onto our children. It is a future that will be defined by higher taxes and a weaker economy. That’s not a legacy to be proud of.