The Fiscal Clock Starts Ticking in America

The fiscal shoe has finally dropped, and it was more a boot than a shoe. Yesterday, Standard and Poor’s (S&P) placed a negative watch on United States debt, i.e., US Treasuries, saying that it was concerned that America would not take the steps needed to bring its debt under control. S&P also noted that it thinks it is very unlikely that any meaningful measures to control US debt will be possible before the 2012 presidential election. That would leave about one year, under the normal S&P timetable after issuing a negative watch, before US Treasuries are given a lower rating. This would mean much higher borrowing costs for America, and the long-talked-about but ignored public worry may come true, that is, China and the rest of America’s creditors may simply stop lending the US money by buying its Treasuries. 

It was a bombshell all over the world, but President Obama’s White House spokesmen said that it was only a political move that had little real meaning.

I am not alone in hoping that the disastrous S&P analysis of America’s debt problem and lack of political will to resolve it will be proven wrong long before the 2012 presidential election. But, with the President and the Democratic Senate refusing to make any effort to help the House Republican majority, elected in 2010 on the basis of its promise to come to terms with the enormous debt burden, one may actually wonder what will change before a new President is elected.

Is Barak Obama such an ideologue that he cannot see the problem, but simply his desire to spend and spend in order to make of America the socialist state he would love to create? Or is he just so naive that he cannot imagine that anything would derail America. 

One thing is sure. The S&P negative watch will make a second Obama presidency much less certain. And, if the GOP can keep from shooting itself in the foot, a Republican ought to be elected in 2012.

It should be someone with lots of financial experience and savvy, something that only Mitt Romney and Donald Trump can show on their resumés. Perhaps, if they can come together, that would be the best possible GOP 2012 ticket. It would be a ticket that has the depth and experience in governing and in financial matters to help America get its fiscal house in order.

Trump - Romney. Trump as president because America needs a president who is dynamic and not afraid of challenges, and Romney as vice president because that will cement the Republican support they will need to be elected.