It’s only the second time that confidence in the federal government’s ability to manage its debt has been officially reduced. So it’s a big deal.
It turns out Democrats’ unlimited appetite for spending and their refusal to address growing deficits isn’t sitting well with close watchers of our economy, and this should serve as a warning that inaction is no longer acceptable.
Despite the left’s attempt to dump all of the credit downgrade blame on Republicans (who worked to trim spending) for the debt ceiling showdown earlier this year, the report from Fitch Ratings spells out much bigger concerns about the U.S. fiscal outlook and the need for a spending overhaul.
The agency downgraded the nation’s credit rating from AAA to AA+. Although still a good rating, the lost confidence is noteworthy.
As Fitch states: “The rating downgrade of the United States reflects the expected fiscal deterioration over the next three years, a high and growing general government debt burden, and the erosion of governance relative to ‘AA’ and ‘AAA’ rated peers over the last two decades that has manifested in repeated debt limit standoffs and last-minute resolutions.”
Jack Smith’s Trump indictment saves the day for Biden
This very bad news for the U.S. economy came at nearly the exact moment that Jack Smith, special counsel for Biden’s Justice Department, announced on Tuesday the latest indictment against former President Donald Trump for his alleged efforts to overturn the results of the 2020 election.
As the debt increases, economic growth slows – and leads to even higher interest rates.
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“We’re at about $32 trillion now and we’re talking about $100 trillion over the next 30 years,” says Romina Boccia, director of budget and entitlement policy at the Cato Institute. “That’s crazy.”
If there’s an upside to the downgrade, it’s that Americans and our elected representatives may start paying more attention to the problem.
“I think that the Fitch downgrade brings needed attention to the fact that the debt deal that Congress struck at the end of May is completely inadequate for addressing the growth in the debt and the unsustainable spending path the United States government is on,” Boccia says.
All is not lost. There are some responsible lawmakers in Congress who are taking action on reining in the government’s spending addiction.
Last month, the Bipartisan Fiscal Forum launched publicly with the goal of identifying and addressing the largest drivers of the national debt. It’s led by U.S. Reps. Bill Huizenga, a Republican from Michigan, and Scott Peters, a California Democrat. The first action will be to form a fiscal commission that should take some of the partisanship out of budget cutting.
Maya MacGuineas, president of the Committee for a Responsible Federal Budget, told me in an email that the “group is a constructive step forward for lawmakers to tackle tough budget challenges.”
Cato’s Boccia also thinks such a commission is the best way to tackle the debt crisis. Democrats and Republicans are both to blame for long-term failures to address the debt – after all, no one wants to be the lawmaker accused of touching Social Security or Medicare while facing reelection.
The nation’s fiscal health truly affects us all – our own future and future generations. Americans should demand Congress and Biden start taking fiscal responsibility seriously.
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.
The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.
The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.
Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.
Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.
Overall manufacturing sales in constant dollars fell 0.8 per cent in August.
This report by The Canadian Press was first published Oct. 16, 2024.
