Can We Expect “Bidenomics” To Fix Our Nation’s Financial Woes?

The recent downgrade of U.S. credit is just one more indicator that we are not moving in the right direction. It is the first downgrade in a decade and another measure that seriously undermines the claim that “Bidenomics” is working, a claim made by the mainstream media with another false message.

While we do get one message from the mainstream media that Bidenomics is working, they also create a news void selectively leaving out important information that would be helpful to see the whole picture. Fortunately people are smart enough to figure it out and the growing discontent with our economy is surfacing as we face an important election in 2024.

Last week, Fitch Ratings, one of the “big three” ratings agencies that ranks investments based on the likelihood of default, downgraded the United States’ long-term credit rating from the highest AAA classification to AA+. The reason for the change, Fitch said, was a “steady deterioration in standards of governance.”

Furthermore, Fitch said, “repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management, while “the government lacks a medium-term fiscal framework, unlike most peers, and has a complex budgeting process.”

In other words, the U.S. government is really bad at handling money, and it’s showing no signs of improving. This is not new information to most fiscal conservatives who call for the same balanced budget requirements imposed on the states to be applied to the U.S. Government. Just think, if the Federal Government was required to spend only what it brings in instead of borrowing like an uncontrolled spoiled child, we may not have amassed such enormous debt, a debt from which we may never recover. It will be a painful experience at best but some point out the practical truth. We have a spending problem that has gone unaddressed far too long. The growing trillions of dollars of debt are not going unnoticed and the lack of good management has become painfully evident. Public pessimism about the state of the economy is at an all-time high.

The news last week marked just the second time one of the big three agencies has downgraded U.S. credit. The first was in 2011, when Standard & Poor’s downgraded U.S. debt as the Obama administration’s gargantuan spending programs began to send government debt spiraling out of control. Biden’s administration has been far worse and there was no end in sight when Democrats controlled all three branches of government.  Covid was used as an excuse, but if not for Covid there would have been some other excuse to satisfy their continuing spending binge. Unfortunately, this often applies to both sides of the aisle, but more pointedly our present predicament has been exacerbated by the Biden administration.

The Wall Street Journal calls out the debt problem as far worse today than it was in 2011 and opines that it has no signs of improving anytime soon. Whereas the ratio of U.S. debt held by the public to GDP (a measure commonly used by economists to assess a nation’s debt situation) in 2011 was 65.5 percent, that figure ballooned to 79.4 percent prior to the pandemic, and is predicted to reach 98.2 percent this year.

News of the downgrade couldn’t have come at a worse time for the White House and Congressional Democrats, who have been hitting the airwaves to promote “Bidenomics” – their term for the supposed economic successes of President Joe Biden. Touting low unemployment numbers and declining inflation, Democrats are hoping that their Bidenomics push will flip the script on Biden’s dreadful economic approval numbers.

But that campaign seems to be running up against the economic realities facing everyday Americans – realities that are reflected in Fitch’s credit rating downgrade. Although inflation has indeed declined it is predicted that the Federal Reserve’s interest rate hikes are taking a toll.  Prices have not declined, indeed they have risen and continue to rise in spite of claims that inflation is under control. The rate of inflation still remains well above the Fed’s target rate of two percent, while prices for everything from a gallon of gas to a carton of eggs remain far above where they were when Biden took office, and show no sign of declining.

The unemployment rate is another farce. One should ask how many “new” jobs have been created or how many are Covid recovery jobs as business continues efforts to recover.  Far too many healthy individuals remain unemployed when they could be a part of the workforce but generous government handouts dis-incentivize matriculation from their comfortable couches to the workplace. 

Democrats have responded to the credit downgrade with defiance. Treasury Secretary Janet Yellen says that the downgrade “entirely unwarranted,” further claiming it was “arbitrary and based on outdated data.”

White House Press Secretary Karine Jean-Pierre also called into question the model Fitch used to make their assessment, before blaming it on “extremism by Republican officials.”

Senate Majority Leader Chuck Schumer similarly blamed Republicans, saying in statement that their “reckless brinksmanship and flirtation with default has negative consequences for the country.”

Neither Schumer nor any other Democrat exhibited any sense of responsibility for the wild spending that contributed to the downgrade – or have indicated they are willing to take the necessary steps to improve the country’s credit rating.

That could be bad news as the federal deficit in the first nine months of the fiscal year hit $1.39 trillion – a staggering 170 percent increase from a year earlier. The cost of servicing the U.S. debt also jumped 25 percent in the same time period to $652 billion.

There is also a possibility that the national debt could skyrocket even higher than most economists are predicting in the years ahead. We are already at a breaking point.

As a shocking Goldman Sachs analysis revealed earlier this year, the actual cost of Democrats’ so-called “Inflation Reduction Act” is likely to be somewhere around $1.2 trillion – more than four times as much as the Congressional Budget Office predicted. If estimates for Democrats’ other big spending policies are also that wildly off base, the country’s debt problem could already be far worse than any official numbers suggest.

The uncomfortable truth for Biden and his fellow Democrats is that credit downgrades, high inflation, and a dismal outlook for the future are what Americans really think of when they hear “Bidenomics.” As much as they would like to manufacture the illusion of a strong economy, reality and cold, hard facts and experience in the marketplace just keep getting in the way.