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Cred⁠i⁠⁠t⁠ Ra⁠t⁠⁠i⁠ngs Ups & Downs

By: The James Madison Institute / August 31, 2011

Blog

August 31, 2011

By Robert F. Sanchez, JMI Policy Director
Who’s responsible for the changes in the credit ratings issued by agencies such as Standard & Poor’s? It all depends on the slant taken by the mainstream media, whose minions blame “Tea Party types” when scores go down but don’t acknowledge their positive influence when scores go up.Example: When S&P recently downgraded the federal government’s credit score from AAA to AA+ the other day, most commentators in the mainstream media howled that Congress’s Tea Party supporters and other conservatives were for at fault for bringing the nation “to the brink of default” by steadfastly demanding reductions in the excessive federal spending that causes the nation’s chronic deficits and creates a need to borrow ever larger sums.Conversely, compare that to what happened several weeks ago when S&P announced that it was upgrading Florida’s credit worthiness. It was already AAA, but the long-term outlook had been “negative,” meaning a downgrade was likely. Now, thanks to the prudent fiscal actions of the 2011 Legislature, S&P has upgraded the state’s long-term outlook to “stable,” meaning that the state is likely to keep its AAA rating for the foreseeable future.Yet Florida’s liberal-leaning news media, so quick to blame congressional conservatives for the federal government’s downgrade, conspicuously failed to praise the Legislature’s conservatives for insisting that the state must live within its means and build up the reserves in its rainy-day fund. Indeed, a Google search reveals that when the Capital Press Corps mentioned upgrade in Florida’s credit outlook, it was within gloomy stories lamenting that the federal government’s phantom spending cuts were going to leave Florida struggling financially in the future as federal grants diminished.Fortunately, the Wall Street Journal’s knowledgeable editors saw things differently, praising Florida and the once-foundering Ohio for improvements in their fiscal health. First, The Journal’s editorial noted that under the leadership of Gov. John Kasich, the Buckeye State saw its credit score upgraded to AA+, then they added this observation about Florida: “Governor Rick Scott’s 2012 budget was praised for ‘significant measures’ to address its budget deficit and for being ‘proactive in reducing expenditures to adjust for revenue shortfalls.’”Granted, the credit worthiness of individual states is less important than that of our national government. Even so, Congress could learn a valuable lesson from observing the example set by Florida’s leaders. Moreover, if states were spared from costly federal mandates and free to be true “laboratories of democracy,” as our Constitution’s authors intended, then state and local governments could handle more of the responsibilities that the expansive federal government has taken over in recent years.