Moody’s is threatening to downgrade U.S. debt if there isn’t progress in budget talks. You will remember Moody’s: It is the bond-rating agency that gave its seal of approval to hundreds of billions of dollars in mortgage-backed securities that proved to be garbage. In any reasonable country, Moody’s opinion would simply be dismissed; indeed, given its catastrophically bad track record, it would have ceased to exist. But, then again, this is not a reasonable country. We remain, in the words of Gore Vidal, “the United States of Amnesia.” Our collective memory reaches back to the last new cycle or two and no more. Thus Timothy Geithner is promoted to secretary of the treasury after failing to avert a financial crisis as head of the New York Federal Reserve. And Ben Bernanke — who somehow managed to miss the largest real estate bubble in human history — is reappointed the Fed’s chairman.
Meanwhile, unemployment has ticked up to 9.1 percent amid growing evidence that our feeble recovery is losing steam. What are our elected leaders doing? Six months ago, they agreed to a deal increasing our deficit by $900 billion; now they are in a panic to slash spending. Given our weak economy, budget cuts are, to put it mildly, batty. The unemployed might simply not exist as far as Washington is concerned. Perhaps they should get jobs as bond raters.
Joe Barnes is the Baker Institute’s Bonner Means Baker Fellow. From 1979 to 1993, he was a career diplomat with the U.S. Department of State, serving in Europe, Africa, the Middle East and South Asia.