The Spectacle Blog

Thoughts on The Credit Downgrade

By on 8.7.11 | 12:34AM

When I heard that Standard & Poor's had downgraded the United States' credit rating from AAA to AA+ it took me back two decades to when I was still living in Canada.

In 1991, S & P, Moodys and other credit rating agencies did the same thing to the Province of Ontario after the NDP government of Bob Rae chose to spend its way out of a recession. The provincial deficit went from $3.3 billion to $9.7 billion in one fell swoop. By today's standards these numbers might look small but the NDP's deficit spending and inability to balance the books played a significant role in them being tossed out of office in 1995 in favor of Mike Harris' Progressive Conservatives after only a single term in office.

Now Ontario's credit rating woes were largely unknown outside of Canada. But the downgrading of the U.S. credit rating is news the world over and is yet another a stain against our reputation abroad. However, the political implications might not be so clear cut. It's well worth remembering that in Ontario (as in the rest of Canada) the legislature and executive are concentrated. The Premier and his cabinet ministers sit in the legislature. There is no separation of powers. So the NDP bore that cross all by itself.

The same, however, cannot be said here. While this development certainly doesn't help President Obama's prestige, Republicans won't be unscathed given their past role in profligate spending and their present role in control of the House of Representatives. And with a President in possession of ample resources and a media that is largely still sympathetic to him no effort will be spared to minimize his role in this most unfortunate development and others which have preceded it and that will follow it. Even if the economy should continue to decline in the coming months, if enough voters still view President Obama as competent and have misgivings about his Republican opponent then we can look forward to another four years of a petulant, prickly presidency complete with corpulent expenditure.

It is thus incumbent upon us to convince people over the next fifteen months that President Obama has not performed competently and is not competent to lead this country a moment beyond his present term.

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