Bad History

On the morning after the US Congress allowed itself to be manipulated into passing a budget-busting new entitlement, Bloomberg reports that Moody’s—a respected credit rating service, is concerned that it will have to drop the AAA credit rating for US Treasuries:

While Treasuries backed by the full faith and credit of the government typically yield less than corporate debt, the relationship has flipped as Moody’s Investors Service predicts the U.S. will spend more on debt service as a percentage of revenue this year than any other top-rated country except the U.K. America will use about 7 percent of taxes for debt payments in 2010 and almost 11 percent in 2013, moving “substantially” closer to losing its AAA rating, Moody’s said last week.

Although the media cheerleaders for Obamacare did mention this in passing, they did not provide any context (what else is new?). If our credit rating falls due to the crushing deficits that the Obama administration is creating, this country will have to pay more interest to those who we borrow from. That means each of us who is a taxpayer (remember: a non-trivial percentage of the President’s core constituency pays no income taxes at all, and overall, 40 percent of our citizens pay no income taxes at all) will have to ante up the money—higher taxes in an economic environment that is not amenable to higher taxes.

But no matter, the President and his followers in the Congress are unconcerned, celebrating a 2 trillion dollar entitlement that will undoubtedly balloon over the next 20 years by a factor of 2, 3 or even more. “We’ve made history!” they exclaim. Indeed, they have—bad history.

Update (3-22-2010)


Although a bit off topic, Victor Davis Hansen discusses something that I alluded to in yesterday’s post. He writes:

Do Democrats realize that we really have crossed the Rubicon? In the future when the Republicans gain majorities (and they will), the liberal modus operandi will be the model—bare 51% majorities, reconciliation, the nuclear option, talk of deem and pass, not a single Democrat vote—all ends justifying the means in order to radically restructure vast swaths of American economic and social life. Is someone unhinged at the DNC? They just blew up any shred of bipartisan consensus when their President polls below 50%, the Democratically-controlled Congress below 20%, and health care reform less than 50%. Usually unpopular leaders and their unpopular ideas seek the shelter of minority rights and prerogatives. What will they do when they are in the minority—since they’ve entered the arena, boasted “let the games begin” and shouted “by any means necessary”?

What goes around comes around. Sadly, this is not the kind of governance that the vast majority of our country wants, but it will become the kind of governance that we get. Barack Obama and the Democrats have set a very bad precedent. We can only hope that when the Republicans are in power they will not follow it. Hope? Yeah, there's been a lot of that going around lately.