In cutting the rating of the United States government, Standard Poor’s complained that “the predictability” of American government actions is not what it used to be.
FLOYD NORRIS
Notions on high and low finance.
It based its decision in part on a forecast of how much the federal government would owe 10 years from now.
The downgrade reflects our view that the effectiveness, stability, and predictability of American policy making and political institutions have weakened at a time of ongoing fiscal and economic challenges. …
We have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us pessimistic about the capacity of Congress and the Administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government’s debt dynamics any time soon. …
Under our revised base case fiscal scenario … we now project that net general government debt would rise from an estimated 74% of GDP by the end of 2011 to 79% in 2015 and 85% by 2021.
Oh, for the good old days when a Republican House and a Democratic president were united in working toward a common goal. Then there was predictability.
Excerpts from Standard Poor’s report, “U.S. Federal Debt Reduction Plans,” Feb. 28, 2000:
U.S. debt has been paid down significantly over the past two years, and it is estimated that U.S. publicly held debt will have been reduced by about $300 billion by the end of 2000. Additional debt reduction initiatives are planned at the federal level before the end of the year. …
On a broader scale, the president and the speaker of the House of Representatives have both called for the elimination of federal public debt by 2013 and 2015, respectively. Both plans would eliminate publicly held debt over about the same time frame, but through different means. …
Speaker of the House J. Dennis Hastert has called on the House Budget Committee to develop a budget that would accommodate eliminating the federal debt by the year 2015. Speaker Hastert believes this can be accomplished through maintaining the Social Security Trust Fund, weeding out wasteful government spending, and prudently spending surplus tax dollars to pay down outstanding debt and invest in other national priorities (such as strengthening Social Security and Medicare).
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