On Friday, Aug. 5, we learned the United States received a downgrade by one of the credit rating agencies — not so much because they doubt our ability to pay our debt if we make good decisions, but because after witnessing a month of wrangling over raising the debt ceiling, they doubted our political system’s ability to act.
The markets, on the other hand, continue to believe our credit status is AAA.
In fact, Berkshire Hathaway Chairman Warren Buffett, who knows a thing or two about good investments, said, “If there were a quadruple-A rating, I’d give the United States that.”
I, and most of the world’s investors, agree.
That doesn’t mean we don’t have a problem. The fact is, we didn’t need a rating agency to tell us that we need a balanced, long-term approach to deficit reduction.
And we didn’t need a rating agency to tell us the gridlock in Washington over the last several months has not been constructive, to say the least.
We knew from the outset that a prolonged debate over the debt ceiling — a debate where the threat of default was used as a bargaining chip — could do enormous damage to our economy and the world’s.
But here’s the good news: Our problems are eminently solvable.
Last week, we reached an agreement that will make historic cuts to defense and domestic spending.
But there’s not much further we can cut in either of those categories.
What we need to do now is combine those spending cuts with two additional steps: tax reform that will ask those who can afford it to pay their fair share and modest adjustments to health care programs like Medicare.
I know we’re going through a tough time right now.
We’ve been going through a tough time for the last two and a half years. And I know a lot of people are worried about the future.
But here’s what I also know: There will always be economic factors that we can’t control — earthquakes, spikes in oil prices, slowdowns in other parts of the world.
But how we respond to those tests — that’s entirely up to us.
For the full transcript of Obama’s speech, visit the Pioneer Online at www.occc.edu/pioneer.