If IT spending plummets, blame your politicians

If IT spending plummets, blame your politicians

Summary: 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.

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TOPICS: China
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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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Topic: China

About

David Gewirtz, Distinguished Lecturer at CBS Interactive, is an author, U.S. policy advisor, and computer scientist. He is featured in the History Channel special The President's Book of Secrets and is a member of the National Press Club.

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125 comments
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  • RE: If IT spending plummets, blame your politicians

    Time to hang some tea bags.
    Tommy S.
    • RE: If IT spending plummets, blame your politicians

      @Tommy S.

      You don't even know what that means. The tea party line is "Government is incompetent, the problem is that we relied on them for controlling so much of the economy in the first place." David is a progressive. He's constantly wishing the government would do more and spend more, he just keep expecting congress to spontaneously hold themselves to a level of accountability they have repeatedly demonstrated they are not interested in.
      tkejlboom
      • RE: If IT spending plummets, blame your politicians

        @tkejlboom The US govt is too small actually... Not enough regulation gave you 2008 and you still dont get it?

        You should cut the FDA, that will solve your SS problem. People wont make it past 40...
        Tommy S.
      • The Tea Party line is

        @tkejlboom
        "Rather than responsibly changing the way the USA does business over time, we are going to D.C. to hold the Nation and the economy hostage until we get our way, even if that means acting irresponsibly and not paying the bills we already owe."
        use_what_works_4_U
    • I don't think so.

      Blaming the tea party for the current debacle is like blaming the firefighters because your kids were playing with matches and set the house on fire. Blame the only people who had a viable option instead of the career politicians who have been creating this for decades.
      PepperdotNet
      • RE: If IT spending plummets, blame your politicians

        @Pepper.dot.Net
        EXACTLY! Where is the president's budget? It all starts with the fact that the POTUS has NO budget. It's not just a lack of leadership, its a lack of responsibility!
        weserphillip
      • RE: If IT spending plummets, blame your politicians

        @Pepper.dot.Net Does any of you understand ANYTHING about economic policies? Obviously not. Im not an American so I dont really care that you will enter a second recession because of them. But, if you start cutting down on govt spending during an economic stagnation you will push the economy over the edge.

        Do you little brats think that you have the monopole on not liking debt? Or that the left somehow like to do deficits?

        Your country is screwed because people are buying in talking points. Now if you dont mind Ill grab my popcorn and watch Rome burn.
        Tommy S.
      • RE: If IT spending plummets, blame your politicians

        @Pepper.dot.Net

        Very well said.
        Keeping Current
      • RE: If IT spending plummets, blame your politicians

        @Pepper.dot.Net Wow, Pepper, that analogy is so wrong in so many ways. How is debt default and an ideology-based refusal to consider new revenues a viable option?
        Joestap
      • WHAT?!?

        @Pepper.dot.Net
        You said "...like blaming the firefighters because your kids were playing with matches and set the house on fire"

        In this analogy you have clearly put the Tea Party in the place of the firemen, and thats sheer nonsense. The fire fighters are not only people who have nothing at all to do with how the fire started, but they are the ones who put it out. This analogy of yours is purely nuts.

        The fact is that the Tea Party did have something to do with starting this particular fire. They were not holding the match, but they certainly made their views plain on what they wanted done with the match if things didn't go their way. And its well known at this point that the Tea Party is a group that holds some significant sway in a particular political party that can remain unnamed.

        And as far as a viable option goes, many people can come up with viable options, but only viable in so far as could be accepted, not in so far as likely to be workable in the long run. If you think the Tea Party has some special vision about how the country should be run, its only because you don't really know how the country , or the world for that matter runs.

        The political landscape is rife with politicians who have been around for years and don't understand how the world or even the government works so don't feel too bad. Bet your bottom dollar that practically every president who gets into the Whitehouse for the first time is unpleasantly shocked at just how divisive the political landscape truly is.
        Cayble
      • RE: If IT spending plummets, blame your politicians

        @Pepper.dot.Net It saddens me you can vote.
        blueskip
      • Tommy S: Apparently, you're the one here with no understanding of economics

        <i>Does any of you understand ANYTHING about economic policies?</i><br><br>It's quite apparent that you're the one with the least amount of understanding of economics.<br><br><i>Obviously not.</i><br><br>What is obvious to a cat, is not necessarily obvious to a dog. You live in a quite different world from reality.<br><br><i>Im not an American so I dont really care that you will enter a second recession because of them.</i><br><br>If you knew anything at all about economics, you'd understand that, what happens to America, or in America, affects the rest of the world.<br><br><i>But, if you start cutting down on govt spending during an economic stagnation you will push the economy over the edge.</i><br><br>Actually, the opposite is true.<br><br>Increasing spending just creates more debt and bigger deficits, and when an economy is in recession, there will be no hope of ever repaying that debt or of bringing down the deficit. <br><br>Increasing government spending is always the wrong solution, even during good economic times. When government increases its spending, it has to take away from the economy and from the people, and by doing so, the economy will decrease its performance and oftentimes will go into recession. That's always the case. <br><br>Spending should be increased, but at the business and personal levels. Government spending is mostly wasteful and ill-directed. The people know how to spend their money better than government. And since businesses are the engine of an economy, they're also the best place for spending increases. The spending in the economy would increase if the government would pull back and allow people and businesses to keep more of their money, rather than government taking that money and deciding where that money is going to be spent. <br><br><i>Do you little brats think that you have the monopole on not liking debt?</i><br><br>Those "little brats" are the only ones with the correct and true solutions. So, if those people are brats, then the "adults", which you think you represent, are the ones with the stupid solutions.<br> <br><i>Or that the left somehow like to do deficits?</i><br><br>It may not be that they "like deficits". The problem is that, they don't know when to stop spending, and they don't know when to stop digging a bigger hole. When the "solutions" to a problem aren't working, then perhaps there is a problem with the solution. Or, perhaps, and most likely, the solution to the problem is removing the problem makers, that being the democrats who got us into the deep holes and would dig some bigger holes for us if allowed to continue being in charge. <br><br>

        <i>Your country is screwed because people are buying in talking points.</i>

        I agree. We need to put a stop to those Obama and democrat party talking points.

        <i>Now if you dont mind Ill grab my popcorn and watch Rome burn.</i>

        Better yet, why don't you go back to school, and get some real training in economics.
        adornoe
      • Joestap: You have a lot to learn...

        <i>How is debt default and an ideology-based refusal to consider new revenues a viable option? </i>

        Nobody wants a default, but, continuing on the spending path, would just create deeper debt and the solution would just get harder to find down the road. Continuing to spend more, especially in the current economic environment, would just insure that, the economy would never be able to recover.

        Then, increasing revenue is the complete opposite of what's needed. We need to insure that the economy recovers, and by increasing government revenue, we would be taking money from businesses and people, which would cause the economy to take a bigger dive. With the economy and people doing less spending because government took more revenue, the entire economic system would collapse. It makes no sense to take away from the economy when that economy is in recession and when there are so many people in need of jobs, and real and productive jobs come only from the private sector. Taking away from the economy would just make a dire situation and turn it into hopelessness. Businesses are now not investing in growth or in hiring because of the uncertainty of government decisions. Businesses are leery of government spending, because, with that spending, the government would need to increase taxes, and it taxes are increased, then those businesses won't be investing for the future or for growth or for jobs.

        There is no other way than to stop spending and to actually cut taxes drastically. So, the only solution is actually the complete opposite of your thinking.
        adornoe
    • RE: If IT spending plummets, blame your politicians

      @Tommy S. Agreed.
      blueskip
      • Another one who doesn't understand the problems or how we got there.

        Wake up people!

        Get a clue already!
        adornoe
  • More sabre rattling

    I hate to add to the political arguments on this site... I mean, it's a tech site and not a political one, but for once I *essentially* agree with David. With a "caveat":

    "America is a great country", that's what we've been told since we were small children. Perhaps...not so much anymore. Between the out-of-control spending of the federal government, the states, and even our local governments (I live in upstate NY), something had to give. Every year, no matter what the economy is doing, no matter which way the deficit points further up, no matter how our jobs are doing and how many imports come from Mexico, China, Taiwan, Japan, Germany, and Canada, our mindset has been elsewhere other than our own internal policies. We're glued to the TV when a white SUV with and ex-football star speeds down a California highway; We're enthralled when a bunch of privileged teeny-boppers make "life changing decisions" (like what shoes go with what outfit) on reality TV. I bet more people know which Iron Chef won against this contender or that than know the ins and outs of the last version of the Patriot Act. We're one of those countries where we don't even blink anymore when a politician throws out 1 Billion $$ at this program or that war.

    In other countries, people are much better informed about what their own government is doing. They know where their tax money goes, and they hold their government accountable. They routinely FIRE their leaders if they don't do a good job. They actually even REMEMBER when it comes time for election who voted for what, and who screwed this and got something right. And... most importantly, in many other countries people still have a sense of "community" and "country". Not so much here.

    Sure, we still all take off our hats when they play the Star Spangled Banner at baseball games. We still pause in thought when we pass a military cemetery. But... look at TV these days. Look at late night "talk shows" on CNN, MSNBC, and those other news channels. It's not about facts and figures anymore. It's about winning an argument with your point of view, just so you can make sure you (a) don't pay taxes, and (b) get the services you feel you're entitled to.

    Everybody has, in some small way (or large), become a passive-aggressive consumer of government services. We love it when everything works, we hate it when we actually have to find out the details of why it doesn't. And God spare those poor politicians if we find out they all actually (for once) did the things we voted them in office for to the point of having an actual political debate.

    You can blame this on a couple of hundred politicians all you want, Dave, but in the end of the day it's our own darn fault. Too long have wanted to pay $2 for 4 liters of Gas (aka a Gallon). Too long have we wanted to play football and baseball after school instead of studying chemistry and math. Too long have not shown up when it came time to vote, and when we did show up we voted based on what color the candidates ribbons were (blue or red) rather than finding out what they stood for and what their voting records were. We've got the collective memory of 1-day flies, the patience of a cafeeinated, sugar saturated A.D.D. patient, and the cognitive skills and critical reasoning ability of a 3 year old. And yeah... that's why they lowered our rating. They finally saw the light. There's only so much fluff and marshmellows in the bag, and when you start to see the bottom that's what happens.

    I'm just surprised they waited this long.
    rock06r
    • RE: If IT spending plummets, blame your politicians

      @rock06r Can't argue a thing you said. You're right.
      David Gewirtz
    • RE: If IT spending plummets, blame your politicians

      Extraordinarily well said .. while it is really easy to blame the politicians (eeeek.. drives me crazy when my KIDS act like that!!!), in the end, we don't get what we asked for, we get what we were willing to stand up for. And about the only thing most of us stand up for anymore is getting our own piece of the pie. It doesn't have to be this way, but we're no doubt so far down the road now that it will have to hurt quite a bit before it gets better and as a culture, we're not much into suffering...
      jim.esten@...
    • RE: If IT spending plummets, blame your politicians

      @rock06r My highest praise to FINALLY hear some rational thought and not well this side said this and that side said that. Everyone is to blame from voters to politicians because for the majority it is more about gimme than what is needed. It is high time that this country gets its collective head out of its rear and do what we need to do. Thank you again, this article and your comments have made this day feel much better.
      dminder@...
    • RE: If IT spending plummets, blame your politicians

      @rock06r Not so sure about your elevated view of "other countries." They seem to be having the same problem, wanting benefits, and cradle to grave security, but not wanting to pay the price. Riots in London are a current example of that. And they are all on the verge of insolvency too.
      Red In Blue