This op-ed was originally published in the New Hampshire Union Leader.
by Mitt Romney
April 25, 2011
Obama is not serious about America’s financial health. America received a giant wake-up call when Standard & Poor’s, the bond rating agency, announced that it was changing the outlook on its highly prized AAA rating for U.S. Treasuries to “negative” from “stable.” This is the first ratings warning for the United States since S&P began evaluating our creditworthiness in 1941.
S&P’s action is a significant marker of our country’s deteriorating economic position.
Treasury bond ratings matter — they are measurements of the fiscal strength of the country. The better the bond rating, the lower the cost of borrowing. And the costs of borrowing by the federal government are, of course, ultimately carried by the taxpayer.
So, what was the White House response?
Obama’s top economic adviser, Austan Goolsbee, downplayed the event, saying, “I don’t make too much about it.” The President himself went on a weeklong campaign swing highlighted by six fundraisers and sharp partisan attacks against Republicans for their attempts at deficit reduction and entitlement reform.
The main job of any executive — whether a CEO, a governor or a President — should be to avert these dangers, or work to repair them. When I took office in Massachusetts, we faced job losses and a fiscal crisis that had the potential to shake the faith of the credit raters in our bonds. We went to work to convince S&P and the other rating agencies that we were committed to reducing spending to balance our budget. I met personally with these officials in my office in Boston, and I traveled to New York City to meet them in their offices. S&P responded in 2005 with a credit rating upgrade that acknowledged the state’s sound fiscal management and the improving strength of its revitalized economy.
Barack Obama is facing a financial emergency on a grander scale. Yet his approach has been to engage in one of the biggest spending binges in American history [Since World War II]. With its failed stimulus package, its grandiose new social programs, its fervor for more taxes and government regulations, and its hostility toward business, the admin-istration has made the debt problem worse, hindered economic recovery and needlessly cost American workers countless jobs.
Consider that during the Bush years, the U.S. government’s deficit — the gap between what Washington taxes and spends within a year — hovered between 2 percent and 4 percent of GDP. Already that was a problematic level.
But in the first year of the Obama administration, the shortfall in our annual spending exploded to 10 percent of GDP — a shocking number — and has risen even higher, to 11 percent of GDP in 2011.
No less dramatic has been the explosion in our level of debt, the total amount Washington has borrowed to pay for its out-of-control spending. In 2008, our debt was 40 percent of GDP. That was bad enough. But, according to S&P, even under the most optimistic scenario our government’s indebtedness will double to nearly 80 percent of GDP by 2013. Other estimates project that our nation’s debt will equal the entirety of our nation’s economy — 100 percent of GDP — by 2020.
We are not on a sustainable course. The consequences may come in slow-motion, with reduced growth, chronic high unemployment and a lower standard of living. Or they may come suddenly, in the kind of cascading crises that we just witnessed when the housing-price bubble burst. The only way to avert it is to take action that is rooted in the need to reduce spending.
The overall picture may be dark, but we should not lose sight of what we are capable of as a country. Our economy is astonishingly flexible. It is highly diversified. We have low inflation. We are the world’s engine of technological innovation. Despite our troubles, the U.S. dollar has preserved its position as the world’s currency of choice.
Even more significant are the clear signs that the American people have had enough of a federal government that is increasing in size and dominance. We are a great republic in which change is possible. The Obama admin-istration may not be serious about addressing the problems that have caused the S&P downgrade, but in less than two years the voters will tell us whether they will issue a decisive downgrade of their own.
[edit made after original publication]