Treasury Secretary Timothy Geithner dinged Standard & Poor’s
for “terrible judgment” in downgrading the federal government’s
credit rating. Less genteel liberals offered less flattering
assesments. “[I]t’s hard to think of anyone less qualified to pass
judgment on America than the rating agencies,” opined Paul Krugman.
“The people who rated subprime-backed securities are now declaring
that they are the judges of fiscal policy?”
Media Matters proclaimed,
“Attention media: S&P lacks credibility.” Michael Moore looked
up from his corn dog to
muse that President Obama should have the rating agency’s CEO
arrested. Some political observers dredged up the January 2011
Financial Crisis Inquiry Report’s finding that “the failures of
credit rating agencies were essential cogs in the wheel of
financial destruction,” specifically identifying S&P as one of
the “the failures of credit rating agencies were essential cogs in
the wheel of financial destruction.”
But the rating agencies’ failure was to exaggerate the
creditworthiness of rickety financial institutions and securities,
giving out favorable ratings like candy. That history doesn’t seem
to help the U.S. government’s case, especially since one could just
as easily argue that past credit ratings have been overly generous
given how deeply in debt we find ourselves.
One area where the critics of the downgrade have a point is that
S&P engaged in, as George Will
put it, “a kind of half-baked political analysis criticizing
the American system of government.” As dysfunctional as our
political class has become, the Founding Fathers built a certain
resistance to change into the system. When decisive action is
needed, some might look askance at the checks and balances that
both parties skillfully wield against one another.
Yet blaming the American system would somewhat miss the point.
It is the wholesale abandonment of the Constitution, particularly
the doctrine of enumerated powers, that has led to our current
predicament. In place of the Constitution bequeathed by our
Founders, we have an unwritten constitution that has turned our
government into what some liberals
describe as an insurance company with a (soon to be much
smaller) army.
The federal government has usurped the power to regulate wholly
intrastate economic activity, or even inactivity in the case of
purchasing health insurance, perversely claiming the interstate
commerce clause makes it right. Washington now unofficially amends
the Constitution by precedent, so that past violations can be used
as future proofs of constitutionality.
We have also created an expensive web of entitlement programs
rooted in no enumerated power of the federal government, which we
find ourselves powerless to reform even as they stand at the
precipice of insolvency. FDR once bragged that “no damn politician”
would ever be able to touch Social Security. So far, recent
political history has proved the old New Dealer right.
Without the strictures of constitutional government, the
American people find themselves laboring under obligations they
never freely chose. In fact, millions now give the fruits of their
labor to support entitlement programs that may well be bankrupt by
the time they are eligible to draw benefits from them. They will
come of age as the Ponzi scheme runs it course and the bills come
due.
Idealistic politicians — some of them in positions of influence
in this Congress — may try to rein in the spending or make the
obligations more realistic. But politics doesn’t offer much
incentive to risk making voting recipients of government benefits
angry right now in order to solve future problems. And even the
Republican-controlled House owes much of its current majority to
demagoguery about the government monkeying with old people’s
Medicare.
The end result is a set of political choices that are in a way
more constricted than those offered by the original Constitution,
which could at least be amended. Attempts to amend the programs
that are the main drivers of our debt may well be a political
kamikaze mission. The people know they can vote themselves funds
from the public treasury, a system very different from what the
Founding Fathers envisioned and which is now collapsing under the
weight of its own contradictions.
Aside from a Democratic “deem and pass” here or a Republican
McConnell plan there, the procedural restraints of the
Constitution, the ones that limit the pace of political change, are
mostly observed. But the substantive restrictions the Constitution
imposes on the political class, the parts that limit what
government can do, are almost completely ignored.
It is those restraints that could have kept the country off a
financially perilous path. Unfortunately, the outlook for
constitutional government was downgraded a long time ago.
