An announcement regarding the nation's credit rating last week was more than a wake-up call. It was a full-scale alarm we hope President Barack Obama and members of Congress will heed.
For too long U.S. leaders - and yes, the public - have been in dreamland concerning the national debt. We are the United States of America, after all. If we need more money, we'll just print it. The rest of the world relies on our economy and our monetary system. Our $14.2 trillion national debt and our $1.6 trillion in deficit spending this year alone are just numbers. They don't really pose a threat ... But they do, right here and right now.
Last week the Standard & Poor's financial rating company revealed it has downgraded its outlook for the nation's future creditworthiness. The rating had been "stable." It now is "negative."
Standard & Poor's also announced it is considering a change in the credit rating it has assigned U.S. government debt.
The rating now is AAA, the highest possible. But Standard & Poor's said there is approximately a 33 percent chance in may have to advise clients Americans, as a government, no longer are low-risk when it comes to buying bonds and financing debt otherwise.
That would mean higher interest rates on U.S. government bonds. Given the size of our national debt, that could cost the government $100 billion or more a year in higher interest payments.
That would be a new burden for taxpayers. It would represent money that cannot be spent for other needs, such as paying down the debt.
Our government is nowhere near worrying about money to pay off our creditors. Again, the deficit this year alone will be about $1.6 trillion.
Even if Standard & Poor's does not decrease our credit rating, the debt and ongoing deficit spending are a drag on the economy. Every one of those dollars we print has an inflationary effect, for example.
No one - not even with the most optimistic plan to balance the budget - has forecast an end to deficit spending for at least a generation. Even if we start cutting back now, our children and grandchildren will suffer from our fiscal irresponsibility.
Money does not grow on trees. That, in effect, was what Standard & Poor's reminded Americans. If we do not heed the alarm, our nation's economy - and our national security - may well come crashing down around our ears.