Sunday, March 10, 2013
Budget Nightmares Just Beginning
Budget Nightmares Just Beginning
By Terry Paulson
Do you think the federal government has a spending problem? In private negotiations, President Obama reportedly told Boehner, "We don't have a spending problem." When Boehner countered that "we have a very serious spending problem," Obama eventually replied to Boehner, "I'm getting tired of hearing you say that."
Two days after the State of the Union, Democrat Iowa Senator Tom Harkin stated, "I want to disagree with those who say we have a spending problem." House Minority Leader Nancy Pelosi recently took up the refrain, telling Chris Wallace on Fox News, "It is almost a false argument to say that we have a spending problem."
It's also increasingly clear that those who disagree seem to pay a price for their truth telling. Egan-Jones, one of the only credit ratings firms not paid by the institutions they rate but by those investors who use the rating, has downgraded the U.S. credit rating three times in 18 months.
On July 16, 2011, Egan-Jones downgraded the U.S.'s sovereign debt by one notch, to double-A plus from triple-A due to "the relatively high level of debt and the difficulty in significantly cutting spending." Two days later, the SEC's Office of Compliance Inspections and Examinations called Egan-Jones demanding information about its downgrade. That October, the SEC called Egan-Jones to inform the firm it was filing a Wells Notice indicating an SEC probe might be launched. Undaunted, in early April of 2012, Egan-Jones again downgraded U.S. sovereign debt one notch. Later that same month, the SEC brought administrative action and filed a complaint.
Egan-Jones initially questioned the SEC's complaint noting that the SEC had never raised any issues or concerns prior to the first downgrade. Since then, the case has been settled. Egan-Jones affirms that the registration reporting issues indicated by the SEC were addressed, but it neither admitted nor denied the accusations.
One outcome of the SEC's penalty raises questions. Egan-Jones, the only ratings agency not on Wall Street's take, is banned from for the next 18 months from rating U.S. government debt. In short, the Democrats won't have to hear Egan-Jones tell them they have a "spending problem" for 18 months.
Others have paid a price. Two weeks after Standard & Poor's finally downgraded the U.S. credit rating in August of 2011, Devin Sharma, S&P's CEO since 2007, was replaced by a Citibank executive. Is that a coincidence? Or is it more evidence that when you point out that the emperor has no clothes, you pay a price.
Bob Woodward and Lanny Davis can attest to the fact that when you tell the truth as you see it, there is pressure. Both men certainly lean liberal, but when they see the President make irresponsible statements, they have enough character to do a little truth telling. The message from the White House is clear--You will be sorry for crossing the President's version of truth.
Yes, Mr. President, we do have a government spending problem, and you're busy trying to silence those who would dare acknowledge it instead of addressing the problem. Here are some frightening big picture highlights from the Heritage Foundation's 2012 annual spending-by-the-numbers report:
"Over the past 20 years, federal spending grew 71 percent faster than inflation. Entitlement spending more than doubled over the past 20 years, growing by 110 percent (after adjusting for inflation). Discretionary spending grew by 60 percent. Deficits have pushed up the debt each year since 2002 as federal spending exceeded revenue. Fiscal year 2012 marked the fourth consecutive year of $1 trillion deficits.... If current policies continue, debt held by the public will approach 90 percent of total economic output by 2022, and will be twice the size of the entire economy 25 years from now."
Sequestration may not have been the best way to shape spending cuts, but President Obama did nothing to work to negotiate a better one. Instead, you painted a picture of financial Armageddon unless we continue spending more.
He failed to let Americans know that even after the sequestration cuts, the federal government is still spending more money this year than last year. If any government leader can't cut 5% of their budget, it's time to take the 95% and give it to a leader who can.
Mr. President, stop blaming, stop silencing, and start working to "actually" cut the size and cost of government before it's too late to save our grandchildren from a bankrupt country with a bill they can't afford to pay.
To read another article by Terry Paulson, click here.
Posted by Brett at 10:18 PM