The BDN Editorial Board operates independently from the newsroom, and does not set policies or contribute to reporting or editing articles elsewhere in the newspaper or on bangordailynews.com.
If officials in Washington wanted to prove Fitch Rating’s point in terms of the agency’s recent downgrade of U.S. creditworthiness, they’re doing a bang-up job so far.
For only the second time, a major credit rating agency has downgraded the U.S.’s rating. Fitch moved that long term rating from AAA to AA+. Other major agencies continue to have the U.S. at their highest rating.
While many financial analysts and economists have downplayed the immediate implications of the move, and questioned the reasoning behind it, the warning here should be inescapable. Beyond an initial dip in the stock market, this announcement should serve as a wakeup call that the federal government’s poor fiscal management has real and mounting consequences.
According to Fitch, the downgrade “reflects the expected fiscal deterioration over the next three years, a high and growing general government debt burden, and the erosion of governance relative to AA and AAA rated peers over the last two decades that has manifested in repeated debt-limit standoffs and last-minute resolutions.”
Along with recent debt ceiling drama, Fitch also cited the Jan. 6 attack as part of that erosion.
Cue the additional news this week that House Republicans worry some in their ranks might actually welcome a government shutdown in the event that Congress fails to reach (another) last-minute spending deal when they return from their August break. It’s almost as if these potential shutdown celebrants heard “erosion of governance” and thought, “We’re on it!”
With or without the Fitch downgrade, there should be little doubt that the constant budgetary drama — including the seemingly endless reruns of the “shutdown or no shutdown” charade that plays on loop at nearly every fiscal deadline — has a damaging impact on this nation’s finances. Whether it is nonstop shutdown politics and the instability and inflexibility it brings to federal spending, or debt ceiling hostage taking, the uncertainty adds up along with mounting debt.
Unfortunately, the White House also couldn’t seem to help themselves in proving Fitch’s point when responding to the downgrade. They simultaneously lashed out at Fitch for a downgrade that Press Secretary Karine Jean-Pierre said “defies reality” while blaming Republicans for the situation. The West Wing can’t seem to decide: is it no big deal, or is it Republicans’ fault? This reflexive finger pointing is part of how we wound up here in the first place.
Nobody needs to convince us that Jan. 6 was a precarious moment for our democracy with impacts continuing to ripple through our society, including this week’s indictment of Donald Trump on charges related to his entrenched denial that he lost the 2020 election. Or that the Trump -era tax cuts were an unrealized promise that helped grow the debt. Or that raising the debt limit to pay bills the U.S. has already incurred is basic fiscal responsibility, and that the full faith and credit of the country should not be used as a bargaining chip.
However, we didn’t amass over $32 trillion in federal debt or come to rely on a splintered federal funding process solely through Republican extremism. It hasn’t helped along the way, surely, but these have been bipartisan failures decades in the making. President Joe Biden should know, he’s been there for many of them, and it’s counterproductive for his White House to pretend otherwise.
“Today’s downgrade should be a wake-up call — we need to get our country’s fiscal and political house in order. The United States economy remains strong, but we are on an unsustainable trajectory,” Maya MacGuineas, the president of the Committee for a Responsible Federal Budget, said in an Aug. 1 statement. “As Fitch points out, our national debt is high, deficits are rising rapidly, interest costs are consuming an increasing share of revenue, and we have numerous major fiscal challenges on the horizon. We also came far too close to default during the last debt limit debate.”
Republicans and Democrats alike must work to right the ship, not with shutdown nihilism or reflexive finger pointing, but by taking a hard look in the mirror and taking a hard look at the fractured process that has helped get us to this point. That means passing funding bills on time (as Senate appropriators like Sen. Susan Collins, at least, have started to do). It means not treating every deadline or cliff as an opportunity for political leverage. And ultimately it means reducing spending and increasing revenues.
Some of it is boring, some of it is unpopular, but all of it is possible.
