The Obama administration harshly criticized Standard & Poor's recently when S&P downgraded the United States' credit rating because of our nation's out-of-control debt.
But S&P's negative outlook sadly was far from isolated. The well-respected agency Egan-Jones Ratings Co. had previously dropped the U.S. bond rating from AAA to AA, and both of the other major rating agencies -- Moody's Investors Service and Fitch Ratings -- have expressed serious concerns about our debt load, too.
Credit-rating agencies are not the only organizations issuing grave warnings about our economic future, though.
Both Citigroup Inc. and JPMorgan Chase have lowered their forecasts of U.S. economic growth.
The United States' gross domestic product -- the total of everything our nation produces in a year -- will grow only 1 percent in the fourth quarter of this year, JPMorgan Chase predicts. That is sharply down from the 2.5 percent growth it forecast earlier.
And Citigroup reduced its projection of growth for 2011 from an already weak 1.7 percent to 1.6 percent. For 2012, Citigroup has slashed its growth projection from 2.7 percent down to 2.1 percent.
Meanwhile, Morgan Stanley said the United States is "dangerously close to recession" sometime within the next year, Reuters news service reported. With high U.S. unemployment already affecting millions of people, the specter of another recession is frightening, to say the least.
In the midst of all this dire news, President Barack Obama wants to increase federal spending, hoping that will somehow "stimulate" the economy. But that obviously hasn't worked with the $862 billion stimulus that Democrats in Congress passed in 2009. The money is gone, our debt is much bigger, and millions still cannot find work. So it seems absurd to bloat our catastrophic debt even further by hoping against hope that even more federal "stimulus" is the answer.
In addition, increased regulations and the president's and Congress' constant threats of higher taxes are paralyzing investment. Rolling back excessive regulations on everything from health care to the environment, as well as ending the threat of tax increases, would give businesses the certainty they need to invest in ways that would create jobs.
Instead, the president is spending his time attacking organizations that rightly point out our country's extremely precarious economic situation.
That criticism won't put anyone to work, and it will not reduce our debt by one dime.
Instead of blaming the messenger, the president should start listening to the message.
Most of the growth that we have experienced over the last decades came from borrowed money. When we stop borrowing, we stop growing, pretty simple really. When we pay back debt, we contract. The coming contraction will be a depression, not a recession.
To attract enough money from lenders (other than the Fed) would require higher interest rates. Higher rates would slow the economy even faster. We have exceeded our ability to grow through more debt.
The high profile economists that say we just need a much bigger stimulus won't tell you what that would do to the dollar...crush it, with a worse result still.
There will be no real growth in the American economy before years of debt reduction/destruction. The new definition of success might well be a life with zero growth and zero debt.
The sooner we embrace the inevitable, the sooner we will arrive at a new normal. The interim won't be easy.
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