Imagine, if you will, a modern American family looking for a loan. Perhaps it’s a home loan, perhaps it’s a car loan. The details don’t matter. What matters is how they behave.
Let’s say this family has excellent credit, but in full earshot of the lender from whom they’re applying for the new loan, they have a violent, loud, highly disruptive debate about whether they’re going to pay their bills.
The husband argues that they should always pay their bills, no matter what, but the wife argues that since they spent more than they should, they should just stop paying bills until they learn to stop their profligate spending.
You can imagine how the lender would feel. Where, before this argument, he might have felt perfectly comfortable lending more money to the couple, now that he’s been hearing their views about debt, spending, and even whether they’re willing to pay their bills, his confidence in them would undoubtedly go down.
He might still be willing to lend them money, but because he can no longer trust them as much, he’s likely to charge more for the money he loans.
In effect, because of their bad behavior, he’s been forced to downgrade their credit rating.
Sound familiar?
This is the problem America currently faces. While there are many arguments about whether Standard & Poors used fully best practices in reducing their rating of America’s credit-worthiness, the indisputable fact is this: America’s politicians behaved badly.
Now, none of us expects actual adult behavior from our politicians. We’d like them to behave with some level of maturity, but we’ve known this breed of creature for far to long to be able to expect real maturity. When it’s a matter of public discussion that members of opposing parties in Congress were willing to actually sit together, you know maturity has left the building.
Our recent debt ceiling debate was an embarrassment.
Look, there’s good reason to debate the issues. Even if the Republicans hold hard and fast to one world view and the Democrats hold hard and fast to another four or five world views, we’re spending a tremendous amount of money as a nation and we need — collectively — to decide what’s in our best long-term interest.
This column is not about which side is right. This column is about how we behaved in our debate about whether we were going to honor our debts. Every year since about 1917 — when America got it’s first public credit rating report card — we’ve had top-shelf credit.
Until 2009, we’d always lived under the debt ceiling, and we’ve always raised the debt ceiling as a matter of course. Now, personally, I don’t think we should be allowed to borrow beyond our means, but we’ve always scraped together enough to cover our obligations, and from a credit-worthiness perspective, that’s what’s important.
But not this time. This time, our politicians aired their dirty laundry in public. They made our creditors nervous. We’ve always had some disdain for the political class, but — until recently — we’ve always felt they could get along well enough to, at least, manage the nation’s important activities.
Not so much anymore.
Nowadays, we’re no longer confident that our politicians will put America first and political differences second. We’re now no longer sure that one party or the other won’t go for a scorched earth policy, simply for political points or the favor of their base constituency — even if that constituency doesn’t understand the subtle nuances of governance.
That’s why I titled this piece, “If IT spending plummets, blame your politicians.” ZDNet Editor-in-Chief Larry Dignan wrote yesterday, “I’ve lived through enough business technology cycles to know that companies instinctively pull back their capital spending amid uncertainty.”
I completely agree with his assessment. We are in a period of uncertainty. The thing is, it didn’t have to be this way. If our politicians had put America first, put our economic recovery first, we wouldn’t have scared our creditors.
Whether S&P is right or wrong in their credit rating, there’s no doubt that if you behave badly in public, if you argue whether or not you’re going to pay your bills, the people who you’re asking to lend you money will start to worry.
So, if we start to see a decline in IT spending due to uncertainty in the economy, we should blame our politicians.
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