Congress and President Barack Obama may consider the recent deal to reduce U.S. deficits by $2.1 trillion a serious effort to slash the $14.3 trillion national debt. But not everyone is convinced.
As you may know, the rating agency Standard & Poor's has lowered the United States' credit rating. It fell from the top level available -- AAA -- to AA+, with a negative outlook. It was the first time the agency has ever downgraded America's credit rating, which shows how serious the debt crisis remains.
Before Congress agreed on a too-small -- and possibly illusory -- $2.1 trillion package of spending cuts over the next decade, S&P had urged lawmakers to enact at least $4 trillion in deficit reductions. Back in April, the agency changed its U.S. credit outlook to negative, and in July it stated that if the $4 trillion level of reductions didn't materialize, it might downgrade America's credit rating.
Now, much to our country's embarrassment, S&P has done just that.
What happens next? Interest rates for consumers and businesses might rise. And if investors in U.S. debt must be paid higher interest, it would add massively to the hundreds of billions of dollars that our government already pays in interest on the huge debt every year.
The two other major credit rating agencies are taking a wait-and-see approach to decide whether to lower the United States' credit rating. They have warned that they might do so if the United States does not do more to deal with its crippling debt.
Predictably, the Obama administration, which has pushed for higher spending, higher taxes and very little in the way of real debt reduction, lashed out at S&P for downgrading the country's credit rating.
But the downgrade is the logical, painful result of Washington's refusal over many years to stop spending money our nation does not have.
Isn't it time to reverse course and really cut wasteful spending before the consequences get worse?