The U.S. Credit Rating Just Dropped. It’s Time for Radical Budget Reform.

Published

2 years ago

August 10, 2023

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Fitch Ratings just downgraded the U.S. government’s credit rating due in part to Congress’ erosion in governance. Indeed, year after year, we see the same political theater unfold: last-minute deals, deficits, and, all too often, the passage of gigantic omnibus spending bills without proper scrutiny, along with repeated debt ceiling fights and threats of shutdown.

But these are just symptoms of a budget-making process that remains in desperate need of reform. With legislators chronically delinquent about following their own rules, the change may need to be as much cultural as procedural. No matter how good the rules are, they’re useless if politicians ignore them. And in a world where politicians are rarely told no when it comes to creating or expanding programs, most simply refuse to have their hands tied or behave as responsible stewards of your dollars.

Adding insult to injury, the budget process has become a winner-takes-all competition, leaving the minority party with little to no voice in budgetary outcomes. Under these conditions, battles over the debt ceiling, continuing resolution votes, and threats of shutdowns are the only ways for the voiceless to state their demands.

Bad processes lead to bad outcomes. The lack of oversight and the general absence of a long-term vision is creating inefficiency, waste, and red ink as far as the eye can see. Without real reform, no one can stop it. So, let’s have some real reform.

What we need is a comprehensive budget process under which programs like Social Security, Medicare, and Medicaid are no longer permitted to grow without meaningful oversight. Combined with other mandatory, more-or-less automatic spending items, they make up more than 70 percent of the budget. Thus, they must be included in the regular budget process and subjected to regular review. Only then will our elected representatives be forced to stop ignoring the side of the budget that requires their attention the most.

This would also help deal with the fact that entitlement spending is, as every serious observer knows, unsustainable. Unless reformed, these programs will drain wealth not only from the government but from the economy. Ensuring their sustainability must be part of any serious budget process reform.

Enter a “Base Closure and Realignment Commission (BRAC)”-style fiscal commission, an idea promoted by the Cato Institute’s Romina Boccia. This commission would be staffed with independent experts appointed by the president. It would be “tasked with a clear and attainable objective, such as stabilizing the growth in the debt at no more than the GDP of the country, and empowered with fast-track authority, such that its recommendations become self-executing upon presidential approval, without Congress having to affirmatively vote on their enactment,” Boccia explains.

I’m uneasy about delegating the president power to appoint “experts.” Unfortunately, Congress has proven they will never seriously address the problem unless forced to. The idea is not unprecedented. Congress has already delegated a lot of its legislative power to administrative agencies and the executive branch. It’s also how the political class dealt with the closures of military facilities after the Cold Waranother set of hard choices they refused to make on their own.

What’s more, Congress would retain some veto power. If they disapprove of the proposal, the House and Senate can reject it through a joint resolution within a specified period. Whether it’s the best solution to address our fiscal problems remains to be seen, but it’s worth considering.

There are many more budget reform ideas out there. I’ll leave you with one more. For years now, Congress has failed to pass a budget, and in turn brought the country to the brink of a government shutdown by fighting over the need for a continuing resolutiona temporary measure that extends previous funding levels for a few months.

Making continuing appropriations automatic in case of a lapse could remove the threat of shutdowns. As explained in one senator’s proposal, if appropriations work isn’t done, “implement an automatic continuing resolution (CR), on rolling 14-day periods, based on the most current spending levels enacted in the previous fiscal year.” Further, to avoid overrelying on CRs, “all Members of Congress must stay in Washington, D.C., and work until the spending bills are completed.”

The road to reform is never easy. Entrenched interests and complexity, combined with congressional spinelessness, are a daunting challenge. But the stakes are too high to shy away. It’s time to completely rethink the way we approach the federal budget, grounding our efforts in the principles of transparency, accountability, and fiscal responsibility.

Politics

Rachel Reeves’s spring budget date is revealed

Published

3 hours ago

December 22, 2025

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Rachel Reeves's spring budget date is revealed

The chancellor’s spring budget will take place in March, the Treasury has announced.

Rachel Reeves will deliver the budget, known as the “spring forecast”, on 3 March 2026.

She has asked the independent budget watchdog, the Office for Budget Responsibility (OBR), to “prepare an economic and fiscal forecast” for publication on the same day.

The Treasury said the government has committed to delivering only one major fiscal event a year, at the autumn budget.

As a result, it said the spring forecast will “not make an assessment of the government’s performance against the fiscal mandate and will instead provide an interim update on the economy and public finances”.

However, the last spring statement saw the chancellor announce a series of welfare cuts, extra money for construction training and defence, and a crackdown on tax avoidance.

The 2026 spring statement is set to be another big political event, due to continuing concern over the state of the economy and the controversy in the build up to November’s budget, when Ms Reeves announced tax hikes.

Her extension to the freeze on tax thresholds last month prompted accusations of breaking Labour’s manifesto pledge not to raise taxes for working people.

She was also accused of not revealing the true state of the nation’s finances in the run-up to the budget after she repeatedly warned about a downgrade to the UK’s economic productivity forecasts.

On the day of the budget, it emerged the OBR told her in mid-September the public finances were in better shape than widely believed.

However, Ms Reeves denied misleading the public.

She said she had been “upfront” about her decision-making, and the OBR figures were clear there had been “less fiscal space than there was”.

All eyes will also be on the OBR during the spring forecast, after it accidentally published details of Ms Reeves’ November budget nearly an hour before the chancellor stood up to deliver it.

The head of the OBR, Richard Hughes, quit over the early release. An investigation found it was due to “leadership failings” over security measures rather than a malicious cyberattack.

World

Timing of Russian general’s assassination appears significant

Published

3 hours ago

December 22, 2025

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Timing of Russian general's assassination appears significant

A Russian general being blown up on his own doorstep isn’t a good look for Moscow, and it seems it’s becoming increasingly common.

The latest high-profile figure to be assassinated since Russia‘s invasion of Ukraine is Lieutenant General Fanil Sarvarov.

He was killed by a car bomb that detonated outside a residential complex, little more than 10 miles from the Kremlin.

Ukraine war latest: Kremlin denies Putin plans to invade European countries

He was a senior figure. Head of the operational training directorate of the general staff, Sarvarov prepared forces for future deployment, having previously served in Chechnya and Syria.

There was no immediate claim of responsibility but Moscow believes Kyiv may have been behind it. No wonder – they’ve carried out similar attacks many times before.

This time last year, Ukraine took credit for the assassination of Lieutenant General Igor Kirillov, who Kyiv alleged had ordered chemical weapons to be used against its troops on the battlefield.

He was killed by a bomb hidden in a scooter outside his apartment block, which Vladimir Putin referred to as a “major blunder” by the security services.

But the attacks didn’t stop there.

In April, Lieutenant General Yaroslav Moskalik was killed after a car exploded in a town just outside Moscow. And two months ago another car bomb in Siberia killed a Russian commander accused of committing war crimes.

It’s unclear why Sarvarov was targeted – perhaps simply because his rank and apparent vulnerability.

The timing appears significant. It follows the latest peace talks between US and Russian officials in Miami over the weekend, where Kremlin envoy Kirill Dmitriev met with Steve Witkoff and Jared Kushner.

In the past, Ukraine has used these kinds of attacks to embarrass Moscow and to bring the war closer to home for Russians.

This time could be Kyiv’s way of undermining Moscow’s narrative in the negotiations.

The Kremlin has been trying to persuade the White House that a Russian victory is inevitable, and that it’s futile to support Ukraine, in the hope of securing a more preferential settlement.

Ukraine has been trying to convince the Trump administration of the opposite – that it’s still full of fight – and taking out Russian generals in their own backyard is one way of doing that.

It shows Washington that the Kremlin is clearly not in total control.

World

Trump’s new Greenland envoy intends to make territory ‘a part of the US’

Published

3 hours ago

December 22, 2025

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Trump's new Greenland envoy intends to make territory 'a part of the US'

A new row over the future of Greenland has erupted between Denmark and the US after Donald Trump appointed a special envoy to the territory.

The US President announced that he had appointed Louisiana’s governor Jeff Landry to the position on Sunday, saying “Jeff understands how essential Greenland is to our National Security”.

Mr Landry then wrote on X: “It’s an honor to serve you in this volunteer position to make Greenland a part of the US.”

But Greenland is currently a semi-autonomous part of Denmark, which is unhappy about Trump’s latest move. The country has summoned the US ambassador in protest, with its foreign minister saying the move shows the US is still interested in the vast Danish territory.

Trump has repeatedly called for the US to take over over the mineral rich and strategically located Arctic island, since winning his second term, and has not ruled out using military force to achieve it.

Denmark’s foreign minister Lars Løkke Rasmussen said Landry’s comments were “completely unacceptable” and that everyone – including the US – must show respect for Denmark’s territorial integrity.

Greenland back in the headlines

In March, US Vice President JD Vance visited a remote American military base in Greenland and accused Denmark – a NATO ally of the US – of underinvesting there.

The issue then gradually drifted out of the headlines but, in August, Danish officials again summoned the US ambassador – following a report that at least three people with connections to Trump had carried out covert influence operations in Greenland.

On Sunday, Trump said: “Jeff [Louisiana’s governor] understands how essential Greenland is to our national security and will strongly advance our country’s interests for the safety, security, and survival of our allies, and indeed, the world.”

Earlier this month, the Danish Defence Intelligence Service said in an annual report that the US was using its economic power to “assert its will” and threaten military force against friend and foe alike.

The report also highlighted the rising strategic importance of the Arctic to great power countries as “conflict between Russia and the West intensifies.

It went on to say that the growing security and strategic focus on the Arctic by the US would “further accelerate these developments”.

Russian President Vladimir Putin has said Russia is worried about NATO’s activities in the Arctic and will respond by strengthening its military capability in the polar region.