Don’t Shoot the Downgrade Messenger
Attacking S&P for the U.S. credit downgrade is like criticizing your doctor for diagnosing your cancer.
August 9, 2011 - 11:57 am
Suppose you saw your doctor for a persistent headache. After performing a full battery of tests, he told you that your MRI scan showed a malignant brain tumor. Would you (1) work with him on a plan to treat your cancer, or (2) threaten the MRI manufacturer with a government investigation? Although most normal people would choose option 1, our government is responding to the news of the S&P credit downgrade with option 2.
The Senate Banking Committee has responded to S&P’s downgrading of the U.S. government’s credit rating by “gathering information“ in preparation for possible formal hearings on S&P’s action. Committee Chairman Tim Johnson (D-S.D.) called S&P’s move “irresponsible“ because it would make it more difficult for cash-strapped state and local governments to borrow more money. In other words, the problem wasn’t the fact that the federal, state, and local governments were borrowing money that might not ever get paid back. Rather, the problem was that S&P was pointing out that fact to the rest of the world.
Unfortunately, our government’s tactic of blaming the messenger has been all too common these past few years.
When the McKinsey & Company consulting firm recently published survey results showing that 30% of employers would likely stop offering their workers health insurance because of the ObamaCare legislation, the White House launched a massive public relations offensive to discredit the survey as biased or flawed. Likewise, Senate Finance Chairman Max Baucus (D-MT) “demanded answers“ from McKinsey on how they reached conclusions he didn’t like — with an implied threat of government action if they didn’t cooperate. (McKinsey did release its survey methodology and the Wall Street Journal noted that “the survey was rigorous.”)
When health insurance companies started raising their rates last year to cover the costs of the various services they were now required to offer for “free,” some insurers told their customers this was a result of the new ObamaCare law. Secretary Sebelius warned that there would be “zero tolerance“ for such “misinformation” and threatened to exclude those companies from the government-run health insurance exchanges scheduled to begin operation in 2014. Sebelius also warned that wrong-thinking Americans opposed to ObamaCare might need “re-education.”