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This administration has set another landmark: For the first time, America’s bond rating has fallen from standard to negative and the country may lose its Standard & Poor’s AAA rating. This development comes at a time when the White House is busy trying to prove that it is serious about addressing the deficit but pushing an unserious proposal. For any faults that Bowles-Simpson or “The Path to Prosperity” possess, at least these plans demonstrate that Washington does have Democrats and Republicans serious about addressing the long-term entitlement crisis. Last week, President Obama revealed that he is not one of those people. Though his speech at George Washington University was praised by some on the Left, even centrists who have generally been supportive note that the proposal is largely based on wishful thinking.
The most astute analysts pointed out that his plan was merely a political stunt meant to shore up his base—his first campaign commercial of the season. No one expected the president to endorse Representative Ryan's or the Republican Study Committee’s budget plans, but at the very least he might have shown a moderate willingness to do what the state of affairs demanded; Democrats at the municipal and state level are beginning to realize that we can’t go on raising taxes forever, but apparently this realization is too much to expect at the national level.
Essentially, President Obama called for cutting defense spending and raising taxes and, maybe, in some obscurely defined way, reducing Medicare costs through one of his medical boards created by Obamacare in 2010. While conservatives should probably welcome more cuts to defense spending than they have previously, it is hard to take President Obama’s proposed cuts seriously since he is calling for them while increasing the number of military engagements in the Middle East. Given the president’s unpredictability on foreign policy, basing the budget on his ability to cut defense spending is ludicrous.
Investors are already voting with their feet on the president’s leadership. The president’s defenders will probably say that the credit-rating agency’s lack of confidence in the government applies to both parties. While Republicans have not always demonstrated fiscal discipline in the past, this is not the case now, when the Congressional Budget Committee’s tax rate proposals look more like that of the president’s own budget commission than does the president’s own proposal. Restoring America’s credit rating will require braver cuts than the president has been willing to make; the time for leadership is now, but so far the American people are getting only partisanship.