Maybe this, finally, will focus everyone's attention. When Standard & Poor's, one of the nation's two main credit rating agencies, threatens the standing of the federal government, everyone had better take notice.
S&P cut its outlook on the United States' sovereign debt a week ago, lowering it to "Negative" from "Stable." It also said there is a one in three chance that it will downgrade the rating on the debt in the next two years. This is bad news, and S&P isn't the only company delivering it.
Only a day later, Robert G. Wilmers, CEO of M&T Bank, warned that the United States "may be on the same calamitous path" toward an economic and debt crisis that has gripped Ireland, Greece and Portugal. Speaking at M&T's annual shareholder meeting in Buffalo, Wilmers took aim at the range of federal spending, calling attention to health care, Social Security, defense spending and interest payments. Combined, those will total $2.6 trillion, or 70 percent of 2012 spending -- already exceeding projected revenues of $2.5 trillion before the rest of the budget is even included.
Health care is on pace to reach one-third of the national gross domestic product by 2040 -- double its current level. Interest on national debt is poised to hit $4 trillion, or 35 percent of the federal budget, by 2040.
It's a calamity in the making.
It's true that Washington is finally paying attention to this runaway train bearing down on the nation, but to what end? S&P specifically noted that it took its action in part because it doubts that the White House and Congress will agree on a deficit-reduction plan before the 2012 elections.
And why wouldn't it harbor doubts, when neither side is serious? Democrats don't want to rein in the spiraling costs of Medicare or even take the easier step of reforming Social Security. Republicans are happy to attack those programs, which they have never liked, but won't lift a finger to reduce defense spending, which is also excessive.
The bottom line is that whatever Democrats and Republicans say about their determination to cut the deficit, both are still protecting their fair-haired children from the cuts that everyone, including Wilmers, knows to be necessary. There is no appetite for compromise in Congress, but without it, divisive problems like the deficit cannot be resolved. Hence, S&P's skepticism, Wilmers' warning and an ongoing threat to the nation's well-being.
Mary Miller, assistant treasury secretary for financial markets, disputed S&P's pessimism, saying the agency "underestimates the ability of America's leaders to come together to address the difficult fiscal challenges facing the nation." We'd say S&P and Wilmers are about on target. Republicans haven't wanted to do anything that could make President Obama look good, regardless of need, and Democrats behaved similarly when George W. Bush was president.
But the toothpaste is out of the tube. Congress and the White House need to act on this now, not after the 2012 elections. Both may resist for political reasons, but Americans who pay the bills have a right to expect action.
It's all well and good to talk about reducing the debt, but we need to focus on the entitlement programs creating that debt: Social Security, Medicaid and Medicare. Then add in the spending called for in Obama's health care plan. Those four items need to be addressed or the nation's debt will continue to spiral out of control.