Research

This past week, we’ve been warning you about the devastating consequences of President Obama’s binge spending, from our credit rating being threatened to higher costs on our debt. Despite the Obama administration’s insistence that our credit rating will stay intact, The Philadelphia Inquirer’s editorial board reminds us that credit downgrades can happen to countries:

President Obama's proposed $3.83 trillion budget for the coming fiscal year would borrow 42 cents of every $1 spent. The federal deficit is expected to rise this year to 10.6 percent of gross domestic product, its highest level since 1946. And the fiscal future looks even dimmer … A credit downgrade can, and does, happen. Credit problems in Portugal and Greece have forced those nations to cut back drastically on government programs, leading to public unrest.

But The Philadelphia Inquirer’s editorial board notes that there even warning signs here at home: Obama could’ve learned the lessons of states like New Jersey and California with “their growing debt and liabilities from public pensions … [making] investors leery of buying their bonds ...” And while surprising to some, the editorial board also praises a Republican’s approach to this crisis versus a Democrat’s approach:

Both Pennsylvania and New Jersey face huge unfunded pension liabilities, although New Jersey's debt per capita is far worse …

Gov. Christie has taken steps to ease the crisis, getting the legislature in Trenton to approve a package of benefit cuts for future employees. It's expected to save the state at least $8 billion over the next 15 years.

Gov. Rendell has proposed essentially to re-amortize Pennsylvania's pension liabilities over 30 years and spread out the contributions, which would just postpone the day of reckoning.

Take The Philadelphia Inquirer’s editorial board’s word for it: Republicans want to diffuse the “ticking debt bomb” while Democrats just want to delay the inevitable explosion.