Category Archives: US
Has the Brain Drain of Top Scientists Caused the US to Lose Its Edge? | Dr. Kaku’s Universe | Big Think
The S&P showed some inefficiencies in their analysis and ratings in the past. Now, their ratings are likely based on political actions, therefore, punishing the government with a downgrade because of a lack of ability to agree on fiscal and monetary policy.
“But Congressional Republicans deserve much more of the blame. For this calamity was entirely man-made — even intentional. The contemporary Republican Party is fixated on taxes. It possesses an iron-clad belief that the existing tax rates should never go up, that loopholes shouldn’t be closed unless they’re offset by other tax reductions, that the fact that hedge fund managers pay lower tax rates than school teachers makes complete sense, that a reversion to the tax rates of the prosperous 1990’s or 1980’s would be unacceptable.”
This just shows that the government system, with a ruling party and an opposition, makes financial decisions more difficult when individuals have different beliefs on economic policies. Is taxes are so bad, then fiscal expenditure should be increased to allow job creation and growth.
If other credit rating agencies do not have plans of downgrading the US ratings in the near future, then it is likely that their calculations are different from that of the S&P’s.
Again, in this economy with struggling unemployment rates, the government dropped the ball on an early and constructive debt deal, and the S&P took an early and exaggerated stance in downgrading the US, now making it slightly more difficult for the economy to fully recover.
Although the government made a debt deal before deadline, S&P still downgraded the US ratings. I think that this is more a political result than an actual rating based on the capability of the US to perform and maintain a high rating.
The S&P calculation of $4 trillion in savings required to maintain good finances is likely an exaggerated value. Although decreasing the debt by $4 trillion will be great for the economy, in this recovery time, it is not possible.
Downgrading the US will only make recovery more difficult, and will probably result in a further loss of jobs.
The government should concentrate on decreasing the unemployment rate before cutting any spending. Raising the debt ceiling now would help stimulate some growth, and relieve unemployment. After this, the government should concentrate on decreasing the debt to a sustainable rate, possibly and preferably, where economic growth is greater than the fiscal deficit.
Increasing the debt ceiling worked before and could work again. All that is needed is for politicians to stop playing blame games and negotiate a balance between government spending, raising the debt ceiling, and possibly decreasing taxes to job creating companies and increasing taxes to high income individuals who benefit from increased economic growth and expansions the most.