Robert Reich on credit ratings, debt ceiling

Former Secretary of Labor Robert Reich offered his thoughts this week on the debt ceiling and the spectre of a credit downgrade:

Now I don’t mean to be impertinent, but as long as America pays its debts on time, who is Standard & Poor’s to tell America how much debt it has to shed and by when?

Until the eve of Wall Street’s collapse in late 2007, S&P gave triple-A ratings to what turned out to be some of the Street’s riskiest packages of mortgage-backed securities.

Had S&P done its job, we wouldn’t have had the debt and housing bubbles to begin with. That means taxpayers wouldn’t have had to bail out Wall Street. We probably wouldn’t have had a Great Recession. Millions of Americans wouldn’t be jobless and collecting unemployment benefits. There’d be no need for the stimulus that saved 3 million other jobs. And far more tax revenue would have been pouring into the Treasury.

In other words, had S&P done its job, the federal budget deficit would likely be far smaller than it is today — and S&P wouldn’t be threatening the United States with a downgrade if we didn’t come up with a plan for shrinking it.

Unfortunately, while he has a point, it doesn’t really seem to matter. These are the rules of the game, and they’re not there for sake of anything or anyone other than the people who hope to run it.

Guns or butter? (A slippery question)

There is a certain lesson that echoes from childhood about priorities. I shan’t trouble you with a sketchy recollection from the dusty book of Things My Father Said; you might start to think I have a complex about him.

I probably do.

Er … anyway, moving right along, a question of priorities. British commentator Mark Steel, writing for The Independent, notes,

It’s so difficult, apparently, to work out how to solve the food shortages in Africa. Because the price of food has just gone up, the way prices do sometimes, caught by a freak gust of wind or flare from the sun or something and whoosh, up they go, whether it’s oil or an Olympic Games or rice and it’s just bad luck.

Combined with the growing population, it means there’s no simple way of stopping millions of people starving. But fortunately the same laws don’t apply to other essential items, such as arms. That’s why you never get reports saying: “What with the booming population and rising prices, there just aren’t enough weapons to go round.

“The crisis is so deep there are now allies of America without access to a single cluster bomb, and in one region of the Congo warlords have to share one flamethrower between two. Charities have sent out truckloads of Tomahawk missiles to Uzbekistan but the queues of government officials go back across the hills, and the fear is that for some this shipment may have come too late.”

And aid programmes require summits lasting several days, followed by statements about tying aid to trade deals, that begin: “You don’t solve the problem of hunger simply by giving people food.”

So while getting food to the hungry seems impossible, there has been a 37 per cent increase in global arms spending in the past 10 years, which raised last year’s tally to $1,204bn. Those of you who don’t understand economics might wonder why there can’t be an agreement to only spend $1,203bn instead, then wander round Sainsbury’s buying a billion dollars’ worth of food and take it to people who are starving, especially as Sainsbury’s currently have a special offer of a free box of Shredded Wheat if you spend a billion dollars or more.