The Obama Downgrade

Submitted by kvaughn on Thu, 07/28/2011 - 01:00

President Obama would have you believe that the Republicans are putting America’s credit rating at risk by their refusal to agree to a raise in the debt ceiling without real spending cuts. Nothing could be further from the truth. Our credit is at risk already due to overspending.

Since 2008, domestic spending has increased 30 percent, at a time when our revenues have fallen due to the extraordinarily weak economic recovery. Has your family increased spending by 30 percent in the past two years?

Unless we significantly reduce spending, our credit rating will be downgraded in the near future. One of the three largest credit rating agencies, Standard & Poor’s, has recently stated as much:

“It isn’t enough for lawmakers to agree to lift the government’s $14.3 trillion debt ceiling. Congress and the White House also must agree to a deficit-reduction package to avoid a downgrade in the government’s AAA credit rating.”

But President Obama and Rep. Gerry Connolly (D-VA) have refused to consider any proposal that would balance the budget. In this campaign, we will hold them accountable.

Greek 2-Year Interest Rates

A credit downgrade would force us to pay higher interest rates, initially costing us an estimated $100 billion per year. But as Greece has discovered, the required extra interest payments can make it even harder to balance budgets; and yet, if the budgets aren’t balanced, the markets are likely to demand even more interest – a catch-22 situation. Even with massive intervention from the European Union, Greece has seen its 2-year bond rates climb from less than 2% to over 30% in less than 2 years.

There is only one way to avoid a similar fate in the U.S. We must develop a plan to balance the budget – and pay down the debt. Because I believe that leaders actually propose concrete plans, I have proposed a detailed balanced budget plan on my website, starting with a 50% cut in Congressional salaries. I challenge Rep. Gerry Connolly (D-VA) and every other candidate for office to propose their own plan to balance the budget and begin paying down the debt. Failure to do so is a failure of leadership and will lead to a darker future with less economic opportunity for future generations.

I am running for Congress to restore fiscal responsibility to the federal government. No more budget gimmicks. No more phony spending cuts. It is time that we send people to Washington who will work every day to ensure that we balance our budget and begin to pay down the debt.

America requires honest leadership and fiscal responsibility, now, more than ever.