(This blog is an update of an article first published as The Afterglow on Blogcritics.) It took almost no time at all for the phony afterglow conjured up by Washington’s politicians to be extinguished by the cold winds of reality. In the brief two days between the signing of the debt ceiling increase and the first gust of trouble, the President and Congress were celebrating. Obama, planning a bus tour of the Midwest at taxpayer expense, was busy filling his head with happy re-election thoughts. After all that political posturing, Congressional members fell back exhausted and went on vacation and deeply into denial.
Forty-eight hours after the debt deal was inked, the stock market plummeted 500 points, erasing the gains for the year in a single day. While the crisis in Europe contributed to the plunge, much of the impetus was the grim economic outlook in the U.S. The Dow finished the roller coaster week with the largest five-day drop since October 2008.
On Friday night, Standard & Poor’s downgraded the U.S. credit rating from triple-A to AA+. The historic move means that U.S. Treasury debt is no longer among the safest investments in the world. The action was prompted by the failure of the debt ceiling legislation to address America’s chronic finance problems, a fact many people already knew.
More than one dozen countries now have a higher credit rating than the U.S. Lower credit ratings generally necessitate higher interest rates on the debt instruments in order to attract investors. The interest we already pay on the debt would feed several small countries annually. With higher rates, the national debt will grow at an accelerated pace, compounding our current problems.
The Standard & Poor’s downgrade is the first crack in the timbers supporting our economic viability. In response to its reverberating sound, the stock market plunged again on Monday, this time by 634 points. For the second time in just three short business days, the Dow hit a record rocky bottom. The performance in the international financial markets is bleak as well. And the response from Washington? It’s been nothing short of suicidal, but not from despair. Self-destruction in D.C. is at the hands of politics as usual.
Even with the record levels of political partisanship and acrimony these days, statements emanating from the White House in the last four days are stunning. The response to the S&P downgrade has ranged from meaningless to blaming it on the Tea Party. Regarding the former, Obama says that while markets will rise and fall, the U.S. will always be a AAA country. Seriously? Tune up the orchestra. It’s almost time for “Nearer My God To Thee”.
Meanwhile, Main Street looks like it’s been tossed in a DEA raid. According to most experts, the housing market is now in its second, or double, dip since December 2007 when the Great Recession began. Unemployment remains so huge, you don’t need 20/20 vision to see it.
On that score, the President is disingenuously touting the July jobs report. But, the hundreds of thousands of people who left the job force last month offset the jobs that were added. In fact, the employed-to-unemployed ratio has not been as low as it is right now since January 1984. In looking at the persistent unemployment situation, we’re watching a slow-motion train wreck. Our year-to-date GDP numbers make this sorry situation even worse. At 1.3 percent, economic growth is practically invisible and puts us even farther behind the unemployment curve.
There was some comic relief amid the gloom and doom in the last week. In the World of Weird, a TV ad is currently running that rivals the 2010 Christine O’Donnell “I am not a witch” pitch. In it, viewers can gaze upon the scowling visage of the perpetually self-important Chris Matthews as he extols Obama’s love of country. We can imagine the sustained howls if Fox News featured Bill O’Reilly in an ad supporting a Republican candidate. The double standard is as alive and well as the double dip.
But, there’s nothing funny about Congress and the President refusing to face a difficult balance sheet and come up with rational corrections. Unfortunately, refusal is a script too many of them have been following for the past three years. Harry Reid’s Do Nothing Senate, for example, has done nothing more than raise platitudes to a political art form. And increase the debt by almost 50 percent since October 2008.
To get an afterglow from that we’d need some serious glow in the dark.
See you in the mirror.