‘Bidenomics’ hits painful milestone

This must be awkward for President Joe Biden. Shortly after he started taking credit for “Bidenomics” and how it’s “benefiting” the country, the United States got a credit rating downgrade.

It’s only the second time that confidence in the federal government’s ability to manage its debt has been officially reduced. So it’s a big deal.

It turns out Democrats’ unlimited appetite for spending and their refusal to address growing deficits isn’t sitting well with close watchers of our economy, and this should serve as a warning that inaction is no longer acceptable.

Despite the left’s attempt to dump all of the credit downgrade blame on Republicans (who worked to trim spending) for the debt ceiling showdown earlier this year, the report from Fitch Ratings spells out much bigger concerns about the U.S. fiscal outlook and the need for a spending overhaul.

If anything, the downgrade indicates that lawmakers didn’t do nearly enough in their negotiations over raising the debt ceiling.

‘Repeated debt limit standoffs and last-minute resolutions’

The agency downgraded the nation’s credit rating from AAA to AA+. Although still a good rating, the lost confidence is noteworthy.

As Fitch states: “The rating downgrade of the United States reflects the expected fiscal deterioration over the next three years, a high and growing general government debt burden, and the erosion of governance relative to ‘AA’ and ‘AAA’ rated peers over the last two decades that has manifested in repeated debt limit standoffs and last-minute resolutions.”

This very bad news for the U.S. economy came at nearly the exact moment that Jack Smith, special counsel for Biden’s Justice Department, announced the latest indictment against former President Donald Trump for his alleged efforts to overturn the results of the 2020 election.

Guess what got most of the attention? The more media scrutiny on Trump, the less time spent on the troubles swirling around the Biden family.

The Trump indictment may be juicy, but the huge expansion of the national debt has real-life implications for each one of us.

We all have felt the sting of high inflation and rising interest rates. So has the national debt, which is now well past $32 trillion.

Rising deficits mean the debt will continue to balloon, especially as trust funds for entitlement programs such as Social Security near insolvency.

As the debt increases, economic growth slows – and leads to even higher interest rates.

“We’re at about $32 trillion now and we’re talking about $100 trillion over the next 30 years,” says Romina Boccia, director of budget and entitlement policy at the Cato Institute. “That’s crazy.”

In 2022, interest payments on the national debt totaled $475 billion – the highest dollar amount on record. In the next 30 years, spending on net interest will become the nation’s biggest expenditure, surpassing even Social Security.

If there’s an upside to the downgrade, it’s that Americans and our elected representatives might start paying more attention to the problem.

“The Fitch downgrade brings needed attention to the fact that the debt deal that Congress struck at the end of May is completely inadequate for addressing the growth in the debt and the unsustainable spending path the United States government is on,” Boccia says.

Americans need to realize that this is an ongoing problem, and that the high debt levels will hurt us by dampening the economy and crowding out private investment, depressing new business creation, jobs and even income growth.

There is some bipartisan hope on the horizon

All is not lost. There are some responsible lawmakers in Congress who are taking action on reining in the government’s spending addiction.

Last month, the Bipartisan Fiscal Forum launched publicly with the goal of identifying and addressing the largest drivers of the national debt. It’s led by U.S. Reps. Bill Huizenga, a Republican from Michigan, and Scott Peters, a California Democrat.

The first action will be to form a fiscal commission that should take some of the partisanship out of budget cutting.

Maya MacGuineas, president of the Committee for a Responsible Federal Budget, told me in an email that the “group is a constructive step forward for lawmakers to tackle tough budget challenges.”

Cato’s Boccia also thinks such a commission is the best way to tackle the debt crisis.

Democrats and Republicans are both to blame for long-term failures to address the debt – after all, no one wants to be the lawmaker accused of touching Social Security or Medicare while facing reelection.

The nation’s fiscal health truly affects us all – our own future and future generations. Americans should demand Congress and Biden start taking fiscal responsibility seriously.