Sunday, August 7, 2011

A Statement on the Downgrade of U.S. Treasury Bonds

President Obama released a statement on the downgrade of U.S. Treasury bonds that failed to mention Republicans or place any blame for S&P’s decision. To continue pretending both sides are to blame is dishonest and misses an opportunity to hold the GOP responsible for its actions. The following is what I think the President should have said. To read more of my notes on this speech, click here.

Good evening,

Moments ago, Standard and Poor’s released a report detailing their opinion on the credit worthiness of the United States. In the past century our debt has grown to become considered the safest investment in the world- an unofficial global currency. It has been so strong that, instead of cash, banks instead choose to hold our treasury bills. Today’s announcement puts that in jeopardy.  For the first time since this system began, our country’s credit rating has been downgraded by one of the major agencies. This is an unprecedented event and a sign of just how far our political system has fallen. It is an indictment not of the capabilities of the American people to work and build wealth, but of their government’s ability to responsibly collect and spend.

I want to take a moment to explain what this means to the average American. This is not the beginning of another financial crisis. The U.S. has not defaulted on its obligations and the S&P report is not being endorsed by any of the other major agencies. There will be no run on the banks and no mass panic on Wall Street. What is likely though, is that our government will have to eventually pay out more interest on our loans- just like a person with weak credit pays more for a mortgage. The implication of this report is that the impasse in Congress and the compromised debt deal that resulted will cost the United States a minimum of 100 billion extra dollars just in servicing our debt.

The report makes it perfectly clear why Standard and Poor’s lowered the government’s rating. It’s not because of changes to our gross domestic product, our productivity, or our unemployment. It is because of the obstacles our Congress faced last month in passing what should be simple and routine legislation. It’s because extremists in this country have grabbed enough power that they could make a credible threat to destroy our economy if their demands weren’t met. They don’t just admit this, but take pride in it. Mitch McConnell, the Minority Leader in the Senate, said the country’s credit was “a hostage that’s worth ransoming.” This downgrade notice explicitly says that it is this kind of political brinkmanship which has cost us our AAA score. Argue about the rating all you’d like, but you cannot deny their main points.

They say that the complete refusal of Congress to discuss revenue shows they aren’t serious about our debt- and they’re right. They say that making the Bush tax cuts permanent would be reckless in the long term, and they’re right about that too. As unfortunate as this report is- and as much as my administration fought its release- it is a reality check for this country. However unpleasant we find the reflection that stares back at us in this mirror, we can’t change anything with denial. This report is a warning that we cannot continue to reject reality whenever it fails to match our political ideology.

This isn’t a problem relegated just to the debt or the economy. It’s about our ability to solve any problem, large or small. The Federal Aviation Administration shut down for three weeks because Congress couldn't come to an agreement over $9.3 million in construction projects. Luckily an agreement was finally reached today, but the gridlock ended up costing the government $400 million in lost fees from the airlines. If these are the battles we face on routine votes to pay our bills and keep critical agencies open, how can we ever address issues like climate change or our reliance on foreign oil? If we were facing the outbreak of World War, could we get together today and agree on something like the Lend-Lease Act?

A hundred years from now this moment will be seen as a pivotal point in our history. What happens after this turning point is for us to decide. Is this the first of a series of defining moments that mark the steady decline of American greatness and world leadership? Or can we heed this warning and turn it into a rallying cry for renewed American jobs, infrastructure, and manufacturing?

This is a democracy and ultimately we get the government we fight for. But I don’t believe this is what people truly wanted in November. Nobody hoped their vote would contribute to another potential financial crisis. Nobody wanted to help bring a downgrade in America’s stature. Unfortunately that is what this new Congress has brought. Representatives showed that they were more worried about retribution from a fringe group of activists than they were about the will of the people as a whole. This system of government cannot survive if our leaders allow themselves to be so swayed, by so few, over matters so crucial.

Our nation has seen such greatness that at times we imagine we cannot fail. So it must have seemed to the citizens of the mighty Roman Empire. There is always a rationale why one warning sign isn’t a promise of future decline and it’s hard for to envision a world different than the one we have now. But as history has shown time and time again, even the strong can fall to hubris and infighting. Let’s rise above this trap set before us.

Let’s not reject this decision, but instead face reality and have an honest discussion of what challenges lay in store for the country. Let’s stop pretending that an ideology is a replacement for facts or truth. Let’s stop hedging our speech and coming short of saying what’s really gone wrong in America. These events aren’t another instance of “Washington being Washington,” but instead are a direct effect of a group whose actions show an ambivalence about the continued success of this country and the system laid out by the Constitution. It’s important to make these statements without equivocation. The American people deserve to know exactly where everybody stands. It is my hope that this movement will give way to a more reasoned opposition and my belief that this country can’t afford any less.

Thank you, and may God continue to bless the United States of America.

No comments:

Post a Comment