A few months ago, Treasury Secretary Timothy Geithner predicted with unshakable confidence that there was “no risk” of a downgrade of U.S. debt. In fact, he argued, “things are better than they’ve been if you want to think about the prospects for improving our long-term fiscal position.”
In his self-assured cluelessness, Geithner reflected the president he serves. Upon taking office, President Barack Obama gravely misread the historic moment. He has brought us to a dangerous pass where a few slips — another sharp recession, a spike in interest rates — could bring on another terrifying economic crisis. To borrow his own put-down of Congress during the debt-ceiling fight, he’s an AA+ president of an AAA country.
Financial crises like that of 2008 always create vast overhangs of debt, but Obama believed he should heedlessly add more. And he’s never once “pivoted” to responsibility.
In February, six months before the downgrade, Obama offered a budget that increased spending and the debt. After 10 years, the deficit still would have been more than $1 trillion. In April, four months before the downgrade, Obama delivered a gimmicky budget speech with no specifics. On April 11, just seven days before S&P assigned a negative outlook to our AAA rating, White House press secretary Jay Carney said the president wanted a debt-ceiling increase with no deficit reduction whatsoever.
Now that the downgrade is upon us, the administration is lashing out. It reeks of desperation and blame-shifting, but, hey, this is the way the game is played down at AA+.
Geithner scolded S&P: “They’ve handled themselves very poorly. And they’ve shown a stunning lack of knowledge about the basic U.S. fiscal budget math.” His huffiness is badly misplaced. Whatever S&P’s failings, it’s not under the misimpression that it’s OK to spend 40 percent more than you take in, which is the basic error in “budget math” of Geithner’s boss.
S&P had barely acted before every Democratic henchman hilariously deemed it “the tea-party downgrade.” S&P does complain about “political brinksmanship” in Washington. But what does it expect in a divided government? We had a blissfully united government for two years in 2009-10, and it gave us a historic spending blowout vastly more irresponsible than the debt-ceiling deal.
The reason is fundamentally political — “elected officials remain wary of tackling the structural issues required to effectively address the rising U.S. debt burden.” Tea-partying House Republicans don’t suffer from this endemic deficiency. The Ryan budget undertook precisely the containment of entitlements that, S&P says, “we and most other independent observers regard as key to long-term fiscal sustainability.”
To this point, Obama has put ideology and cute partisan games above the national interest in leadership worthy of AA+. He thought he could spend as much as possible in his first two years, and a favorable business cycle and rhetorical repositioning would bail him out before 2012. He didn’t count on reality having different plans.
Now, S&P has blown the whistle. Like all political malefactors, the administration isn’t sorry for what it did; it’s sorry it got caught.
Lowry is editor of the National Review.