10 Years Ago: S&P Downgrade of US Debt

If you’re one of the many wondering “How much debt can the United States possibly accumulate?”, then you’re not alone.

10 years ago, Standard & Poor’s, the global credit rating agency, downgraded the U.S. from a AAA credit rating to only AA+. The agency cited concerns about the national debt of the U.S. (around $14 trillion dollars) and the country’s continuous budget deficits. There was a worldwide panic in the stock market, raising major concerns about the trustworthiness of lending to the United States. Fast forward to today, and the U.S. national debt has doubled to around $28 trillion dollars and the deficits continue. Why is this country still in the same situation 10 years later?

In our new video celebrating 10 years of Economic Update, Prof Wolff explains the troublesome economic policy the United States has adopted: instead of making the rich pay their fair share of taxes, the U.S. borrows money from them instead.

“A government's capacity to pay is dependent fundamentally on two things: can the government tax or can the government borrow?”

The super rich have created enough political power to prevent progressive taxation, and as we learned from the recent reporting in Politico, the wealthy do their best to avoid the little taxes they are charged with. We would not be here today if the rich paid their fair share.

Rather than tax, our political leaders opt to borrow. The U.S. debt bubble continues to grow, with no fundamental changes in the plans of either major party. This extreme reliance on government debt to keep the economy afloat exposes the myth of a private, capitalist economy for what it is.

“There is no private economic capitalism in our society. There is capitalism for sure, but it is on life-support from the government with no prospect of that ending anytime soon.

Will this destructive pattern continue? How can we learn from this history?

10 years ago, Economic Update with Richard Wolff was the first program produced by Democracy at Work, and it has brought you analysis of questions like these every week for a decade. 

Producing Economic Update has always depended on audience donations. To help us grow for another 10 years, please consider donating to Democracy at Work with a monthly gift. Our monthly supporters are invaluable to us, in that they allow us to plan for the future, and commit to bringing you more Economic Update. Thank you.

Showing 2 comments

  • Philip Wood
    commented 2021-08-25 19:11:01 -0400
    A re[ort just released said that 61% of US citizens paid no income tax. The rich are apparently the only ones paying taxes. Our problem is not having enough tax money but rather a completely out of control spending. If there in no incentive to work why would you do it. I am retired and everywhere you look there is anther freebe program but only for those who choose not to be financially responsible because if you were you cannot possibly qualify.
  • Eric Halvarson
    published this page in Updates 2021-08-24 09:30:30 -0400
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