Saturday, August 6, 2011

A Lack of Leadership: The Root of the S&P Downgrade

Candidate Obama said he would “transform the Untied States of America” and unfortunately this is the one promise he kept. Two and one half years into his presidency, the National Debt has climbed to 100% of our Gross Domestic Product (GDP) for the first time since World War II; GDP growth for the first six months of this year has been a meager 0.8%; we continue to run a $1.5 trillion annual deficit, essentially growing the Debt by 10% versus the 0.8% GDP growth; 25 million Americans are unemployed, under-employed or have dropped out of the work force; 45 million Americans are on food stamps; and now Standard & Poor’s (S&P) has downgraded our country’s credit rating from AAA to AA+ for the first time in our history. America has truly been transformed!

I could add to this list a number of foreign policy decisions that have elevated our enemies and trashed our long-time allies, but the economic failures of this president are more striking and more easily understood. His $900 billion economic stimulus bill did little more than pay the salaries of state workers for one year and increased the Debt. His re-distributive one-time programs of cash for clunkers and mortgage-restructuring failed and added to the Debt. The overbearing healthcare legislation, that the Congressional Budget Office now says will increase the cost of healthcare, did nothing but create uncertainty for business. Massive new and restrictive regulations from the Environmental Protection Agency (EPA) and Congress, when under full Democratic control, has forced private capital to the sidelines and almost completely stalled economic growth. These are only some examples of Mr. Obama’s transformation of our country.

S&P warned us several months ago that our credit rating was in danger of a downgrade and pointed to the lack of leadership in Washington, D.C. as the main problem. Mr. Obama still does not get it. His reaction to the weak GDP growth and recent slide in the equities markets was to blame the earthquake in Japan, the economic problems in Europe and the uprisings that formed the Arab Spring. His supporters are already saying publicly that Obama inherited a situation that was “worse than we thought.” Translation – blame former President Bush. Mr. Obama will not take responsibility for a failing economy that he has managed since January of 2009 and it is this clear lack of leadership that is at the root of S&P’s downgrade.

The truth is that Mr. Obama’s socialist experiment of hyper-spending has done nothing more than add $4.5 trillion, or 45%, to the Debt since taking office. He has over regulated the economy into a private sector coma. It is time for real leadership and a return to free market capitalism. S&P made that clear with its downgrade.

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