ie8 fix

Between the Lines

Larry Dignan, Andrew Nusca and Rachel King

Microsoft has higher credit rating than U.S. government

By | August 6, 2011, 5:07pm PDT

Summary: Microsoft now has a higher credit rating than the U.S. government, since its downgrading late last week.

For the first time in its history, the United States last week lost its AAA credit rating from Standard and Poor, an internationally recognised credit rating organisation.

The U.S. government’s ability to handle the recent threat to default is one of many reasons why the credit agency lowered its rating to AA+, putting the United States below the United Kingdom, Germany, France and sixteen other countries.

Yet, Microsoft is one of four U.S. based companies which still holds onto its AAA rating, with the exception of some financial and government institutions, despite the government’s lack of ability in holding onto its own.

In 2008, Standard and Poor gave Microsoft the highest status for credit rating, beating other high profile companies like Apple, Google and Amazon.

On the other hand, last week it was revealed that Apple — the company behind the Mac and the world famous iPod line — had more cash and marketable securities in reserve than the U.S. government, as the debt crisis escalated.

Apple was said to have had $76.4 billion, while at the time, the U.S. government had just shy of that, with an operating cash balance of $73.7 billion.

Apple’s reserves would have been “enough to buy Goldman Sachs or Facebook”, hypothesised The Atlantic.

For now, though Standard and Poor has downgraded the U.S.’ credit rating, two other credit rating agencies still classify the economy in AAA status — at least, for now.

The U.S. House of Representatives and Senate eventually passed the new laws, allowing the government to raise the debt ceiling to pay its bills on time.

Other companies still with AAA rating include Exxon Mobile, Johnson & Johnson, and Automatic Data Processing.

Related content:

Kick off your day with ZDNet's daily e-mail newsletter. It's the freshest tech news and opinion, served hot. Get it.

Topics

Zack Whittaker, a criminologist who studied at the University of Kent, Canterbury, is a journalist, writer and broadcaster.

Disclosure

Zack Whittaker

I worked briefly with Microsoft UK in 2006 but no longer have any connection with the company. Regardless, I remain impartial and unbiased in my views.

I don't hold any stock or shares, investments or industrial secrets in any company, but have signed confidentiality agreements with a number of UK and U.S. organisations, whose names I am not at liberty to disclose.

I was involved with Kent Union, the University of Kent's student union, undertaking voluntary, non-salaried, elected positions between early 2009 and mid-2010.

No other company, body, government department, non-governmental organisation or third sector organisation employs me or pays me a salary in any capacity whatsoever.

As a freelance journalist, whenever expenses are given and taken by a company that is not CBS Interactive, these will be disclosed in each relevant post to ensure transparency.

I currently work with a UK law enforcement unit, but this is an entirely separate position which bears no connection to other work.

(Updated: 23rd October 2011)

Biography

Zack Whittaker

Zack Whittaker, criminologist who studied at the University of Kent, UK, is a journalist, writer and broadcaster.

After studying criminology at university, though still in his early-20's, he has already had a series unconventional work and voluntary positions. He has worked with researchers studying neurological illnesses like Tourette's syndrome (which he suffers from), has given lectures on the nature of disabilities in the public community, and occasionally ends up speaking on television and radio discussing the events of the day.

He first had academic work published at the age of 22, then still an undergraduate, and has been cited by a wide range of publications: from CNN, the Huffington Post, AllThingsDigital, The Atlantic Wire and CBS News.

Related Discussions on TechRepublic

Did you know you can take part in these discussions with your ZDNet membership?
50
Comments

Join the conversation!

Just In

Sort of like the store selling half rotten produce.
Joe.Smetona Updated - 9th Aug
@jeffpk ...

We have a small grocery store across from the senior citizen high rise. Their produce has always been terrible. They sell mostly to senior citizens that come in and use magnifying glasses and hold the fruit or vegetable about 8 inches away to examine it. It's terrible that they can get away with that, but they have a captive audience that is not discriminating and will buy the inferior product, just like people do with Windows. Then they are saddled with choosing and maintaining AV, spyware detectors, rootkit detectors, botnet scanners, registry cleansers and all the things not required by Linux.

They can't compete with Apple and Android Linux in the smartphone-tablet arena. That's where the money is now.

They don't know how to introduce a smartphone that needs anti-virus when the other two market leaders don't.

Also the TDL-4 MBR Rootkit botnet (no articles on ZDNet) infected 4.5 million Windows (only) users in the first three months of 2011. Notice that unlimited plans have virtually disappeared. Carriers are afraid of botnet infected smartphones sending out 2,400-10,000 spam emails a day. With a fixed data plan, the overages would be the responsibility of the phone owner. It's the difference between 3G, 4G and broadband. Windows has been getting away with botnets on home broadband but 3G and 4G are cell tower internet plans and the usage/pricing is highly focused. Overages are costly to other subscribers. Carriers are afraid of the Windows botnets taking over their networks, and most certainly, Microsoft will not take any financial liability for their botnets. They will blame the Carriers, AV companies, users or refer to their infamous EULA stating that it exonerates them from liability for botnet caused data overages.
0 Votes
+ -
As US government has to either tax these Corps to death or debase the US$ to cover the mega pile of debt, every US corporate bond becomes risky now. Listen to the real smart investor Peter Schiff's take on what it means for US to be downgraded.

http://www.youtube.com/watch?v=SgNLTb58K_Y&feature=player_embedded#at=479
@LBiege Peter Schiff is a fringe individual whose father is in prison for being one of the "you don't have to pay taxes" folks and the apple hasn't fallen far from the tree.

Real economists laugh at Mr. Schiff and his constant warnings of economic apocalypse; we're still waiting for his hyperinflation.
http://www.youtube.com/watch?v=fkQsGnrVvRQ&list=FL65HEiElWMe8&index=2
@jgm@... I don't know this Peter Schiff but I wouldn't bet against anything with the economy these days.
all the so-called mainstream "real economists" fools you could find and put together, trust me.
@jgm

Bob Pollen doesn't get federal finance. He fails to see that about 29% of US govt debt outstanding matures annually and must get rolled over -- that's $4.2 TRILLION each year, even though current interest due on the debt runs about 22.3% of revenues.

Do the math. Current rev is about $1.7 T/yr. Govt cannot re-fi $4.2T of maturing debt from current rev, forcing debt roller over. Without rollover, it's game over. Cutting spending to $0 still doesn't cover roll over.

Any rise in market rates for US Treasury paper makes the expense of roll over higher.


Bob Pollen is a fringe economist at a two-bit farmer's college, U Mass.
I'm pretty sure anyone has a higher credit rating than the US does right now. Even the guy who never pays on time.
0 Votes
+ -
Of course.
root12 7th Aug
Billions of people and most governments are still locked-in to Microsoft products just as they are with the US dollar (for now). Alternatives to the US dollar is starting and will pick up pace. In addition, the US government is now a slave of the corporate sector, and Microsoft is just one of those many companies and financial institutions. People? 'The people are there to give us da money'.
@root12

The United States of America: Of the corporations, by the corporations, for the corporations. The destruction of the middle-class is well under way. The elitist upper echelon has resented for decades having to compete with the lower classes for jobs that were once their private domain.

What amazes me even more is how people vote against their own best interests.
0 Votes
+ -
Wrong enemy friend.
People 7th Aug
@gtdworak . Corporations are only taking advantage of the laws created by the politicians being bought. Cannot blame them for the competitive advantages they buy.
Not true. Microsoft will be downgraded too, being based in US.
@tbjerret

If Microsoft has to move to another country to benefit themselves and prevent going down with the USA then they will do that (might not be in the next few years but it will happen eventually).
0 Votes
+ -
I disagree.
Mister Spock 7th Aug
@josh92
Microsoft would not risk the lucrative US market on saving a few dollars on taxes.
0 Votes
+ -
Very troubling
Dietrich T. Schmitz, Your Linux Advocate! Updated - 7th Aug
We have here:
1) A runaway Federal Budget Deficit
2) A looming Trade Deficit
3) A Treasury Bond Market mostly controlled by China
4) China manipulating currency pricing
5) Free Trade that isn't Free, see item 2
6) NAFTA designed to enrich a few and empoverish millions of Americans
7) CAFTA, the same as 6
8) An intransigent grid-lock in Government where nothing gets done

We are, economically speaking, standing on a busy street corner with our trousers dropped; it's only a matter of time until someone walks by and kicks us where it hurts.

What can we do?

1) Rescind NAFTA, CAFTA
2) Divest ourselves from participation in the WTO
3) Form a coalition to enact needed legislation, a party that gets things done
4) Establish a Mandate that the U.S. be self-sufficient as a matter of National Security and survival.
5) Begin a 5-10 year plan to create a National Manufacturer Incubator Project Federally subsidized, much as is done for Farming
6) Begin a graduated 5-10 year plan to establish an Industry Sector-targeted Tariff on imports to the US on goods from countries that are holding the largest 10 trade deficits.
7) Funnel Tariffs into a Treasury Fund in escrow for (see item 5 above) Mandated Manufacturing Incubator Project.
8) Send financial offsets to Manufacturers participating in the MIP project to offset their ramp up and scaling costs.
9) Eliminate off-shore labor tax sheltering mechanisms over a 5 year phase-out
10) Make outsourcing any American job a criminal offense.

When MIP actually gets underway, jobs will return, cash flows will be generated and trickle down the US Economy instead of outflows to China and other trade deficit countries. We will need to enforce a Federal Balanced Budget and reduce the size of Government at the same time.


It won't happen overnight, but we Americans need to knuckle under and make hard decisions or the progression of bad news will only turn to worse.

God Bless America.

==============
P.S.
See why Andy Upgrove feels strongly about tariffs:
h-t-t-p://www.businessweek.com/magazine/content/10_28/b4186048358596.htm
0 Votes
+ -
@Dietrich T. Schmitz, Your Linux Advocate!

$3 billion dollars = 33.04 tons of $100 dollar bills..

Interesting how someone could know to short the stock market on the day it lost over $800. A coworker came to me in the lunch room and was bragging how he shorted the market and made a killing. It would be interesting to know who paid the bonuses and how much they made for destroying the economy. Causing the financial collapse and shorting the market is no different than what other traitors did throughout history.

The academic community has it pretty well figured out.

http://www.youtube.com/watch?v=qOP2V_np2c0
0 Votes
+ -
Thanks Joe. You are always thoughtful.
Dietrich T. Schmitz, Your Linux Advocate! 7th Aug
@Joe.Smetona

nt
0 Votes
+ -
So you blame this on Microsoft
Mister Spock 7th Aug
@Joe.Smetona
as usual?
@Dietrich T. Schmitz, Your Linux Advocate!

You're spewing common sense, something alien to our elected officials in Washington. Politicians are interested in one thing and one thing only, getting re-elected. They stopped caring for their constituents a long time ago. Their addicted to corporate money which funds their elections. And to receive that funding, they have appease their corporate puppet masters while pretending to care for the people they represent.
@Dietrich T. Schmitz, Your Linux Advocate!

Whether what you advocate is a good idea or not I can't say because I"m not as into politics and policy as you clearly are but I can say with near absolute certainty that what you advocate will not come to pass. Change is gradual (and usually for the worse). And when radical change happens it's only because one's back is against the wall, and that kind of pressure and lack of forethought is not at all conducive to an intelligent plan/reaction to the crisis. A panicked response is never an intelligent/effective one. The USA is doomed (although it will probably live on in name, though it will be near unrecognizable to the USA of the past 60-70 years).
0 Votes
+ -
Common sense has not been heard in Washington
Dietrich T. Schmitz, Your Linux Advocate! 7th Aug
@josh92
In case you hadn't noticed, our backs *are* up against the wall. Where have you been?

And, we have neglected our own back yard going on 30 years.

This is your morning wake-up call...
@josh92 May be you should tell someone that in congress
0 Votes
+ -
@Dietrich T. Schmitz, Your Linux Advocate!

Agreed, 100%! Great post - Thank you.
@Dietrich T. Schmitz, Your Linux Advocate!

What can ew do?

Stop fighting wars on credit.

People forget that we had a budget * surplus* before GWB started his unfunded wars.
@Dietrich T. Schmitz, Your Linux Advocate!

You know you did not have to wast all those bits and could have just said you want America to isolate itself from the world and hide in your little corner of it instead of competing on the world stage.
where government planning of the economy always resulted in complete failures.

The best recipe for bringing the U.S. out of the economic slump is to get the government off the backs of business and people. Getting government more involved is the complete opposite of what we should be doing.
@Knowles2 Exactly. And way manufacturing are going to become fully automated. You already got Chinese companies in robots to do many of the jobs as well. An there are only so many managers jobs available.
0 Votes
+ -
RE: Microsoft has higher credit rating than U.S. government
Rabid Howler Monkey Updated - 7th Aug
The U.S. is a sovereign (Microsoft is not). Here's the ratings for sovereigns:

http://www.standardandpoors.com/ratings/sovereigns/ratings-list/en/us/?subSectorCode=39&start=0&range=50

What's interesting is that the U.S. shares the AA+ rating with Belgium. And Belgium has very recently been placed in the lineup for the watch list of European countries, following Italy and Spain.

The U.S. government passed on two peace dividends. The first after WW2 and the second after the collapse of the Soviet empire. The military-industrial-congressional complex was so powerful when Eisenhower (the former Supreme Allied Commander of Europe) was elected President in 1952 that he could do little to stop it.

The U.S. opted for the financial industry over the manufacturing industry somewhere around 1980, culminating in the repeal of the Glass-Steagall Act, which placed a wall between commercial and investment banking, in the mid-90s followed by the placement of financial derivatives beyond regulation.

Standard and Poor's, along with Moody's and Fitch, are discredited as they gave Wall Street AAA ratings for junk financial derivatives in exchange for cash.

Five things IMO have to be done. Glass-Steagall must be reinstated and the monster banks dismantled. Financial derivatives must be banned as they are little more than gambling. The U.S. empire must be voluntarily dismantled (we can no longer afford it's price tag and do we want our creditors to force it upon us?) and the U.S. returned to a Republic (there's absolutely nothing wrong with a Republic, it's what we all pledge allegiance to and this is where we started from). All elections in the U.S. must be publicly-funded (corporate control of the U.S. must end). Corporations must lose their legal person status.
0 Votes
+ -
Good Background
sboverie 8th Aug
@Rabid Howler Monkey
Good back ground leading to current problems. S&P, Moody's and Fitch failed to properly rate the banks over the dirivitives that led to the big wipe out of interbank credit and the economic stresses that are reverberating globally.

The banks are back to making high risk deals that they may not be able to cover; they got bailed out once and have been called too big to fail.

S&P, Moody's and Fitch failed to catch the financial balloon that is the source of the current misery and now S&P has added to the misery by lowering the US AAA rating. Their being being vigilant now does not excuse the lack of vigilance then.

I don't know if your solutions will work, but it is a start for a discussion. To paraphrase the Chinese curse; we live in interesting times.
The more I watch these guys the more I like Ron Paul! He has some very radical ideas that a lot of "analysts" believe in. He might just be what America Needs!
@Peter Perry

Yes, Ron Paul is great. Though I'd hardly call his advocating that we follow the Constitution "radical" (which is what his whole philosophy boils down to and he says it all the time "all we need to do is follow the Constitution".
@josh92 No, Radical is filing bankruptcy as a nation, disbanding the federal reserve and keeping the cost of doing business in the US down...

Radical is ordering the withdrawal of all troops from Iraq and Afghanistan on his first day in office! I believe he would do it.

Radical is drastically reducing the number of countries we have bases and reducing our Military Budget while still protecting our home land.

Radical is doing away with the Globalist Mentality.
0 Votes
+ -
Big Companies are hoarding cash
databaseben 7th Aug
The reason why the government can't pay its bills is because big corporations are not paying their fair share of taxes, hence is the reason why they have so much free money on hand.

If the corporations did pay their fair share, then the republicans would not have had to borrow money from other countries to subsidize the business of running america.

In the end the Tea Party's protected the bank accounts and credit ratings of big corporations and sacrificed America's instead. Pretty sure the big corporations now appreciate the fruit of their labors.
@databaseben@... Tea Party? Seriously? Did the put NAFTA in place or Raise the Taxes so we are one of the most expensive places to do business in the world?

Did they give china Most Favored Nation status while knowing they are manipulating their currency and burdening the world?

Did they load an already burdened economy down with trillion dollar healthcare package while running a lame duck congress?

You really need to do more research.
@Peter Perry No but they did block Obarma 4 trillion dollars plan which would have saved America credit ratings at triple A, and largely because of the tea party that congress did not agree a long term deal to sort out the deficit. All because they support tax breaks on private jets.
and that's precisely what S&P warned that the U.S. should not be doing in order to keep its AAA rating.

Increasing the spending limit is what the credit rating agencies warned against, and the other ratings agencies will be lowering the U.S. rating if the government doesn't go back and re-work a deal the cut spending.

What S&P wanted was a plan like what the republicans had come up with, the being the "Cut, Cap, and Balance" plan which the republicans voted to send to the senate and Obama. Once that plan was tabled by the democrats and poo-poohed by Obama, the stage was set for S&P to lover the credit rating for the U.S.

So, you and Obama and the democrats have things completely backwards from what the credit ratings agencies wanted. Until the government gets things right, and spending is really cut, then the rating will remain lowered and might even go lower.
@Peter Perry One thing S&p wanted was Tax rises and spending cuts, or a balance approach, because they know that 4 trillion would never be removed from the economy as it would cause to much hardship to to many people. They certainly did not want a plan that only involve spending cuts. An they certainly did not want the Republicans imposing there plans on the US which could be abandon next year, they wanted by a bi party plan, that included Tax rises, Spending cuts, and some investments in the US infrastructure and education system.

Instead what they got is two parties bickering over whether they should keep tax breaks for private jets in place. To be honest a deal which allowed the US treasury to borrow as much as it needs and permanently remove the debt ceiling would have done it as well. The America is the only major economy that have this ceiling and I expect there will be attempts to do this congress in the next few months. An it will not be a temporary deal like the republicans wanted who wanted to give Obarma such powers so they could blame him for the deficit.
@databaseben@...

You're either joking or ignorant.

1.> The reason the government can't pay its bills is because they spend more than they take in. and 48%+ of American citizens don't pay any income tax at all; in fact they get tax refunds and don't pay taxes.

2.>Corporations don't "pay" taxes, they only collect taxes; any taxes they pay get passed on to the consumer/end user in the form of higher prices. A corporate tax is an end user tax.

3. > The Democrats have been in control of Congress since 2004 and before 1994. They haven't passed a budget in two years. The borrowing is a philosophy of Democrat Keynesians.

4.> The Tea Party was the only group interested in really dealing with the National Debt. Their membership is large enough to deal with the old guard Republicans and liberal Democrats. Yet.
0 Votes
+ -
Tea Party Slideshow (Sideshow)
Joe.Smetona Updated - 9th Aug
@bb_apptix

http://www.flickr.com/photos/pargon/sets/72157623594187379/

Government spending and Personal spending are two different things.
0 Votes
+ -
Backwards thinking..
adornoe@... Updated - 8th Aug
The "tea party" wasn't there when the problems plaguing the U.S. got started, and those problems got started about 100 years ago, and they've been exacerbated in the last 50 years, with more and more social spending. The tea party is the people reacting to the madness which seems to be the way Washington runs the government.

The only reason government can't pay its bills is because they've spent a lot more than the economy produces in tax revenue, and increasing tax rates to businesses and people would actually bring in less tax revenue.

BTW, the problem is not that businesses are not paying their fair share. The problem is that businesses and people are overtaxed, and if those taxes are cut, the government would actually get more tax revenue as a result of more economic growth from lowered taxes.

Furthermore, companies don't pay taxes. People pay taxes. Even the taxes levied on corporations are paid by the consumer. Any time taxes are raised on corporations, those taxes are passed on to the consumer by way of higher prices for products and services from those corporations. In, addition, when taxes are raised on corporations, they either have to cut their production costs by laying off people, or they move their operations and jobs to more business-friendly environments, and that includes overseas facilities.

What you suggest is the complete opposite of what should be done to get the economy and the country on the road to recovery. Your recipe would kill the U.S. economy a lot faster.
Otherwise, I'll continue to make fun of UK English.

Am I in ZDNet UK? It looks like I'm in there.
@Grayson Peddie Be kind, he's an ickle British guy. Though it does beg the question why he's writing here and not ZDNet UK.
Microsoft is focused on income and hordes its cash.

Whereas the US spent all ist money and the went deeply into debt on wars it refused to raise income to support

MSFT deserves a higher credit rating, they earned it.
0 Votes
+ -
the problem is a lot more to do with social spending, which has increased to unsustainable levels for decades.

Funding wars is the only obligatory spending mandated by the constitution; all other spending is actually unconstitutional.
0 Votes
+ -
@jeffpk ...

We have a small grocery store across from the senior citizen high rise. Their produce has always been terrible. They sell mostly to senior citizens that come in and use magnifying glasses and hold the fruit or vegetable about 8 inches away to examine it. It's terrible that they can get away with that, but they have a captive audience that is not discriminating and will buy the inferior product, just like people do with Windows. Then they are saddled with choosing and maintaining AV, spyware detectors, rootkit detectors, botnet scanners, registry cleansers and all the things not required by Linux.

They can't compete with Apple and Android Linux in the smartphone-tablet arena. That's where the money is now.

They don't know how to introduce a smartphone that needs anti-virus when the other two market leaders don't.

Also the TDL-4 MBR Rootkit botnet (no articles on ZDNet) infected 4.5 million Windows (only) users in the first three months of 2011. Notice that unlimited plans have virtually disappeared. Carriers are afraid of botnet infected smartphones sending out 2,400-10,000 spam emails a day. With a fixed data plan, the overages would be the responsibility of the phone owner. It's the difference between 3G, 4G and broadband. Windows has been getting away with botnets on home broadband but 3G and 4G are cell tower internet plans and the usage/pricing is highly focused. Overages are costly to other subscribers. Carriers are afraid of the Windows botnets taking over their networks, and most certainly, Microsoft will not take any financial liability for their botnets. They will blame the Carriers, AV companies, users or refer to their infamous EULA stating that it exonerates them from liability for botnet caused data overages.
AND if you refuse to tax your corporations, of course they will have more money then the government.
because those corporations will send their jobs and manufacturing facilities to other countries.

Raising taxes actually has the opposite effect of what liberals think will happen.

Furthermore, corporations don't pay taxes. People end up paying for those corporate taxes by way of higher prices that those corporations will have to charge to pay for that "increased cost of doing business". That should not be so hard to understand, even for a liberal mind.
0 Votes
+ -
From a Criminologist
jorjitop 8th Aug
to a bunch of flakey techies. This is the economic analysis we really need.
Maybe... just maybe, the government should stop spending more than it is taking in today (no more stretching the dollar by selling bonds and generating future debt).

Maybe... just maybe, the government needs to be told enough is enough, you can't have the balloon AND the lollypop you saw in the store windows.

Why (politics aside) is this so hard to stick to this principle?

Yeah, I know.. politics, two factions in the sandbox... people only interested in what it is in it for them...

What, do we really need a war on our soil; do we really need to experience what those in Europe did when Hitler bombed cities, before we will understand that it still ain't that bad if the government does not send me a check for sitting on my butt because I am in between jobs?

Of course, some would argue the necessity of putting people in houses that didn't deserve (aka could those that could not afford them), despite our government's opinion that more people needed to own homes...

what's that mean, well, just another way the govenment has taken more and done more to insure that your dollars are worth less, as is the asset value of your retirement.

Again...

Why is a balanced budget so hard to acheive?

Oh, I know... because no one wants to give in, to give up something, etc....

Look around you, chances are you know someone (or many people) that have done everything they can to give their kids more than they got, someone(s) that have spoiled the kids and done their part to further condition future society leaders to expect, to feel deserving of, to rely on so-called entitlements and to further a governing body's thought that we cannot do without each and every one of the social programs that we can't afford...

Talk about keeping up with the Jones...

Problem is, I, for one, am uncertain who our government is trying to keep up with ...

oh, that's right, their simply trying to stay relevant (aka needed)...

What a complete and utter waste of expended air...

Anyone? Can anyone tell me why it is so hard to equate spending with available income?? Anyone??
Any solid company should have a higher credit rating than the US. The National Debt exceeds the GDP. Congress and the President have shown that they're not serious about getting the debt situation under control, and it's easy to see why- they're either Keynesian and believe that deficit spending is good, or they're politicians more concerned with giving away money to get elected, or both.

This latest "debt deal" only kicks the problem down the road past the 2012 elections. They cut nothing; they only promised reductions in future increases, and S&P, as well as any financial analyst worth his weight in beans, realized that the US governement isn't serious about dealing with our horrendous debt.
because, even if there is no "new spending", the cost of servicing the debt increases, and that cost is added to the debt itself. With an increased debt load, it means that the government will have to spend more of it's revenue to pay for an ever-increasing debt. It's like a credit card where an individual will never be able to pay it down, because, the interest on that deb on the card will continue to get added to the amount owed, and instead of the amount owed coming down slowly, it will actually be growing.

However, the debt/deficit deal from last week does include more spending, which will continue making the problem a lot worse every day. That's why S&P had to cut the governments credit rating.
cut n paste from LinkedIn:

The US Congress Needs a Project Manager
As I walk onto any troubled project, guess I hear? We are spending too much money, we cannot miss the due date, we need everything we are asking for, and it is "their" fault. My job is telling them the bad news?we need more money, we are cutting scope, and the project is still going to be late. Those are the unavoidable facts and the stakeholders need to accept them. Worse than that, I am not going to blame anyone. Blame is counterproductive. So, how does this compare to the situation with the United States Congress? In short, they do not get it. They need an apolitical, outside entity to build the recovery plan?just like we do anytime we are recovering any project.
Lack Of Leadership
The problem starts with the elephant in the room, a government devoid of leadership. Do not read political party into that statement. Leadership is simply missing, no qualifiers. I am certain congress must have a couple of people with leadership qualities; the Gang of Six comes to mind. But they are not the ones getting the press. Headlines are derived from rhetoric, arguments, and bombastic speeches rather than cooperation and compromise. Politicians need headlines to make constituents think they are doing something. The US went through weeks of proposals pushing agendas to use as fodder in future speeches for the next election. The minority and majority leaders of the House and the Senate were spineless, self-serving puppets to the next election, unable to stand up and admit the US needs to reduce scope and increase revenue. If this were my project, they would be the first to go in an attempt to get people working together.
Define The Scope
The next step is to make sure we are working on the right scope. In every bill we seem to have a new project charter?industry bailout, healthcare, budget, debt ceiling... oh, what about jobs? We need a vision and each project task needs to map to that vision. If the goal is to eliminated the deficit, balance our budget, help industry create jobs, and protect the American people from attacks (from terrorists and corporations) on their inalienable right for life, liberty, and the pursuit of happiness then every action must be directed that way. Granted, this is a pretty big plate. It is impossible to complete this project in a two or six year term. This is a multi-decade plan for which many of us will not live to see its completion. Yes, folks, twenty to thirty years followed by maintenance plan?no more instant gratification and, yes, a lot of work. Our forefathers did not build this country engaging in the colonial equivalent of watching TV, eating Cheetos, and attending tailgate parties while wearing hats that resembled cheese wedges. Everyone pulled their weight and made sacrifice.
Work With The Stakeholders
Next, we need to talk to the stakeholders?the citizens of the United States, the leaders of foreign countries that want our financial and military assistance, and the countries that loan us money. All three need to sacrifice. Fewer services, higher expense, less profit. Stakeholders will need to suffice with cuts in what the government provides (from weapons and world policing, to farm subsidies and welfare), increases in the expense of services (raise taxes and international cooperation), and reduction in profit (lower interest rates). Will anyone be happy with this plan? Hardly, everyone will lose something. It is nothing more than applying the rule of triple constraints. Set a time line, determine the financial needs in that time, and address the required budget by increasing revenue and decreasing scope.
The Current Dilemma
This seems to oversimplify a huge problem; however, it is the defined approach that is needed. Unless congress takes this simple objective approach?the process that has fixed hundreds of projects?they will not address the problem. Instead, they are embroiled in creating proposals to get headlines and garner votes from a small set of voters. They are stuck in an egotistical, aggrandizing, self-serving promotion forgetting about the country they serve. If it is true that less than 20% of the people in the US are opposed to a tax increase, why pander to them? Our congress is not beholden to the American people; they are shackled to the campaign donor. They are focused on what is good for the politician, not the stakeholders.
Standard and Poor?s
Just like any business with inadequate leadership, Standard and Poor?s appropriately dropped the S&P bond rating. They rightfully see no leadership, no cooperation, and, the coup de gr?ce, no one suggesting a plan to solve the problem. They look at it as I do when called in to bid a recovery job. I need one question answered, "Does the client really admit they have a problem to solve?" Without that realization the sacrifices will not be made. In Congress, we have one side blaming the other. They deliver ultimatums (i.e. we cannot increase revenue), not compromise. In other words, our "leaders" cannot make the sacrifices required to fix this problem, yet they expect everyone else to. They have turned into the best government money can buy.

On every job I take, I have one ace up my sleeve. If you do not like what I am telling you, fire me. I am not afraid to lose my job. Our congress men and women are afraid to lose their jobs. They are drunk on the beltway power. They need to revert to the basics and understand simple financial rules. Once they get that lesson, they need to learn how to lead and not be afraid to use it.
Tags: USCongress, Leadership, Project Management, Project Failure, S&P
?2011 eCameron, Inc. BackFromRedTM and Back From RedTM are trademarks of eCameron, Inc. All rights reserved.
http://www.linkedin.com/news?viewArticle=&articleID=688019050&gid=69301&type=member&item=65184395&articleURL=http%3A%2F%2Fecaminc.com%2Findex.php%2Fblog%2F59-generalblog%2F263-2011-08-08&urlhash=sJ3u&goback=.gde_69301_member_65184395

Join the conversation!

Formatting +
BB Codes - Note: HTML is not supported in forums
  • [b] Bold [/b]
  • [i] Italic [/i]
  • [u] Underline [/u]
  • [s] Strikethrough [/s]
  • [q] "Quote" [/q]
  • [ol][*] 1. Ordered List [/ol]
  • [ul][*] · Unordered List [/ul]
  • [pre] Preformat [/pre]
  • [quote] "Blockquote" [/quote]
ie8 fix

The best of ZDNet, delivered

ZDNet Newsletters

Get the best of ZDNet delivered straight to your inbox

Facebook Activity

White Papers, Webcasts, & Resources
ie8 fix