One of three major credit-rating agencies downgraded the U.S. government’s creditworthiness by a notch last week.
Fitch said it made the move mostly because of the government’s rising debt and ongoing political difficulties of addressing spending and tax policies — “and the erosion of governance.”
With a review like that, the nation is lucky it didn’t drop more than one grade.
The lower the credit rating, the higher the interest rate the nation may have to pay to borrow money, the same as home or car buyers with low credit scores.
No doubt the analysts at Fitch are looking at the political bickering, grandstanding and threatening tweets amid the real possibility of a government shutdown if congressional Republicans and Democrats cannot agree on a budget deal before the federal fiscal year starts Oct. 1. That’s less than eight weeks away, in case some members of Congress forgot to check the calendar.
It’s really less than eight weeks, since the Senate does not return to session until Sept. 5, and the House until Sept. 12.
Much of the obstruction to reaching a compromise budget plan comes from conservative House Republicans, who have a list of fiscal, social and moral issues they want addressed on their terms — or they will block any spending plan, even if a majority of lawmakers support it.
Failure to approve a budget would mean shutting down services important to the public.
Fortunately, Alaska’s elected leaders generally are better than the worst of Congress, though Alaska’s budget problems are similar to those at the federal level. The state has no long-term plan to match revenues with expenses; too many elected officials are reluctant to talk about taxes; too many promise more than the treasury can afford; too many campaign on simple answers that are about as real as a pot of gold at the end of a rainbow; and the state is dependent on dwindling savings to cover any gaps.
Thankfully, Alaska has not stood at the edge of government shutdowns which are becoming as common in Congress as political scandals. But the state has kicked the fiscal can down the road so far and for so many years that Alaskans are nearing the end of the pavement. The Permanent Fund’s earnings reserve — the money that helps pay for dividends and public services — could run out in a few years, depending on investment returns.
It’s doubtful that Congress will reach a bipartisan compromise on a long-term budget fix, not as presidential election campaigns are heating up. But maybe the Alaska Legislature and governor can get it together for next year’s budget — before a rating agency takes away one of our gold stars.
— Wrangell Sentinel
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