America’s Credit Is Falling—and the Government Is Still Digging Deeper Into Debt
America’s debt-addicted government just lost its triple-A credit rating from Moody’s, as it previously had from fellow rating agencies S&P and Fitch. Many in Washington shrugged the move off as minor or as unfair treatment of the Trump administration. The truth is more sobering: a flashing red signal that the United States is no longer seen as a “perfect” credit risk and that politicians should stop pretending economic growth alone can bail us out.
Yes, the mess is real, and it’s because habitual deficit financing—the very disease fiscally-minded Founding Father Alexander Hamilton warned against—has become business as usual.
The reckoning comes as House Republicans push to extend the 2017 Trump tax cuts with a “big, beautiful bill.” If handled correctly, it’s a good idea. But while the legislation aims to avoid tax hikes, it pairs modestly pro-growth provisions with a smorgasbord of costly special interest giveaways. Worse, it assumes we can afford yet another $3 trillion to $5 trillion in debt without serious consequences. That’s the kind of magical thinking that spurred the credit downgrade.
Starting with Hamilton, American politicians long understood the importance of fiscal policy guided by the ethos of balanced budgets, low taxes, and steady debt reduction. Their vision, combined with a deep respect for contractual repayment and financial responsibility, made America a creditor nation.
Washington abandoned that honorable legacy in recent decades. U.S. national de
Article from Reason.com
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