In the coming days we’ll sort through the repercussions of S&P’s downgrade of our credit rating, including concerns about the impact a potential interest rate increase would have on our ability to service our suffocating $14.5 trillion debt.

I’m surprised that so many people seem surprised by S&P’s decision. Weren’t people paying attention over the last year or so when we were getting warning after warning from various credit rating agencies that this was coming? I’ve been writing and speaking about it myself for quite some time.

Back in December 2010, I wrote: “If the European debt crisis teaches us anything, it’s that tomorrow always comes. Sooner or later, the markets will expect us to settle the bill for the enormous Obama-Pelosi-Reid spending binge. We’ve already been warned by the credit ratings agency Moody’s that unless we get serious about reducing our deficit, we may face a downgrade of our credit rating.” And again in January, in response to President Obama’s State of the Union address I wrote: “With credit ratings agency Moody’s warning us that the federal government must reverse the rapid growth of national debt or face losing our triple-A rating, keep in mind that a nation doesn’t look so ‘great’ when its credit rating is in tatters.”

One doesn’t need a Harvard Law degree to figure this out! Just look across the pond at Europe. European nations with less debt and smaller deficits than ours and with real “austerity” plans in place to deal with them have had their ratings downgraded. By what magical thinking did we figure we could run up perpetual trillion dollar deficits and still somehow avoid the unforgiving mathematics of a downgrade? Nothing is ever “too big to fail.” And there’s no such thing as a free lunch. Didn’t we all learn that in our micro and macro econ classes? I did at the University of Idaho. How could Obama skip through Columbia and Harvard without learning that?

Many commonsense Americans like myself saw this day coming. In fact, in June 2010, Rick Santelli articulated the view of independent Tea Party patriots everywhere when he shouted on CNBC, “I want the government to stop spending! Stop spending! Stop spending! Stop spending! STOP SPENDING!” So, how shamelessly cynical and dishonest must one be to blame this inevitable downgrade on the very people who have been shouting all along “stop spending”? Blaming the Tea Party for our credit downgrade is akin to Nero blaming the Christians for burning Rome. Tea Party Americans weren’t the ones “fiddling” while our country’s fiscal house was going up in smoke. In fact, we commonsense fiscal conservatives were the ones grabbing for the extinguishers while politically correct politicians and their cronies buried their heads in what soon became this bonfire.

With S&P and others now warning that we could face another downgrade if we don’t get serious about our debt problem (i.e., recklessly spending money we don’t have), Washington needs to wake up before things get worse! We’re already hearing murmurs about QE3, which is just madness and will further debase our currency at a time when the dollar’s status as the world’s reserve currency is already being questioned. The loss of the dollar’s reserve currency status would adversely impact us in every conceivable way. Our standard of living would decline as imports become more expensive (including imports of foreign oil), government wouldn’t be able to finance deficits as cheaply, and American corporations – employers – would lose a competitive edge. It would be another crack in our status as a financial superpower.

Last May, I gave a speech at Westhills Community College in Lemoore, California, to an audience that included farmers from California’s Central Valley. I tried to paint a picture for them of where all of this was heading. The following is an excerpt from my prepared remarks:

Now we’re all getting hit with rising food prices too. Back in November of last year, I predicted this would happen when the Federal Reserve dropped a $600 billion money bomb called QE2 on us! That’s short for “quantitative easing 2.” It’s a fancy term for running the printing presses and creating money out of thin air – which drives down the value of the dollar and makes the price of everything more expensive.

 

As I predicted six months ago, these policies will lead us down a path where for the first time in our history our fate will be taken out of our own hands and placed in the hands of the world’s capital markets. They will force us to make the responsible decisions that our leaders are unwilling to make. Just as the destinies of the Central Valley farms have been taken out of your hands by the federal government’s overreach into your water rights, so the destiny of our nation will be taken out of our hands because our leadership has failed to get our financial house in order.

 

This isn’t some theoretical threat any more. It’s already happening. The world’s biggest bond investment fund PIMCO announced last month that it was dumping U.S. Treasury bonds. The head of PIMCO, Bill Gross, one of the world’s preeminent debt investors, warned that the U.S. is in serious risk of default with our trillion dollar deficits and no end in sight. And last week, credit rating agency Standard & Poor’s downgraded our credit outlook to “negative” – that’s the first time that has happened to us since the attack on Pearl Harbor. The IMF has even given us formal notice that, unless we do something to deal with our debt problem, we could tip the world economy into another recession.

 

It is a disgraceful and embarrassing situation when the United States finds itself justifiably chastised in the same tone normally reserved for near-bankrupt economies.

 

And in this, like in shutting off your water, the federal government has failed you. Their reckless spending and destruction of the dollar will make access to available credit for farmers and small business owners harder to get. And it will make transportation costs higher because it will hit everyone at the gas pump. You see, because the Obama White House won’t let us drill domestically, we’re forced to import oil that we pay for in dollars. So, when the value of the dollar drops, the price of gas goes up. And if you think $4 a gallon is bad, wait till you see what life is like at $6 or $7 a gallon.

 

Last November, the so-called smart people all laughed at me when I warned them of this. They told me not to make such a big deal about rising prices. Well, guess what – it became a big deal all on its own.

 

In fact, there was an editorial in the New York Sun that said – and I quote: “As gasoline is nearing six dollars a gallon at some pumps, the cost of groceries is skyrocketing, and the value of the dollars…has collapsed to less than a 1,500th of an ounce of gold. Unemployment is still high. Shakespeare couldn’t come up with a better plot. But how in the world did Mrs. Palin, who is supposed to be so thick, manage to figure all this out so far ahead of the New York Times and all the economists it talked to?”

 

Well, I’m sure the New York Times writers will remember the famous line: “You don’t need a weatherman to know which way the wind blows.” And right now the American economy is in the howling, hot headwinds of a gathering storm. We’re printing up and buying up our own notes at an unprecedented rate, and the Fed is artificially holding interest rates down to nearly zero. Anyone with commonsense could see what was coming. Unfortunately, common sense is in short supply among our leaders. It’s like they never believe that the rules of common sense apply to them. They think somehow we’ll escape from the consequences of their policies. It’s the same magical thinking that allows them to run up trillion dollar deficits and still think that we can “win the future.”

 

Every other generation has weathered recessions by sacrifice and belt tightening. But our leaders today decided that they could magically paper over the tough decisions by running the printing presses. A little history lesson might have showed them how well that worked out for Germany in the 1930s. The Weimar Republic inflated its currency so much that it took a wheel barrel full of paper money to buy a loaf of bread. That might be the main thing I remember from Mr. Crum’s history class at Wasilla High, but it told me all I needed to know about the inflationary dangers of a weak currency and why we must avoid it. What a shame Mr. Crum didn’t teach at Harvard.

That was just three months ago, and things have already gotten worse. We have to face this storm head on. It won’t be easy, but there are real solutions to grow our economy and reduce our debt.

First, we need to get serious about our deficit. No more accounting gimmicks. No more cuts in “out-years” that never materialize. The permanent political class in D.C. might be fooling themselves with these Enron-like accounting games, but they’re not fooling the world’s capital markets. And we don’t need any more happy talk from the White House about “investing” in solar shingles and really fast trains. The White House shouldn’t even bother floating these new spending programs. We can’t afford them. Period. We need to stop this deficit spending, balance our budget, repeal Obamacare, cancel all unused stimulus funds, and reform our entitlement programs. We have to have an adult conversation about our spending commitments; circumstances have changed, and we must adapt. I know none of this will be easy, but, “thick” or not, the average American outside the D.C. politico bubble knows that we no longer have a choice! We will have entitlement reform and a balanced budget; it’s just a matter of how. We can do it ourselves in a calm, methodical, and responsible manner, or we can wait for the world’s capital markets to ram it down on us. Let’s be responsible and do it ourselves. And let’s get serious about reducing the size of government across the board and rooting out waste. How many more reports (that today are destined to merely gather dust on the shelf) do we need about duplicative and unnecessary programs before we actually do something about government waste?

We need to get this economy moving again, and the real stimulus we’ve been waiting for is domestic energy development. We must reduce our dangerous dependence on foreign oil by responsibly developing natural resources here. This will provide good paying jobs, reduce our trade deficit, increase federal and state revenue, ensure environmental standards, and actually stimulate our economy without incurring any debt. That’s real stimulus! Affordable, plentiful, and secure energy is the foundation of every thriving economy. Let’s make it the foundation of ours. Let’s do the opposite of President Obama’s manipulation of U.S. energy supplies. Let’s drill here, build refineries, and stop kowtowing to foreign countries in asking them to ramp up energy production which makes us even more beholden to them as we rely on their foreign product. Let’s move on tapping our massive domestic natural gas reserves. Natural gas is the perfect “bridge fuel” to a future when more renewable sources are available. It’s clean, it’s green, and we’ve got a lot of it. Let’s drill. Let’s build an infrastructure for natural gas cars and power plants. Energy development can help kick start our economic engine.

In addition to energy security, I embrace a pro-growth agenda that can make American corporations far more competitive on the global stage. (I will be writing more about this in the coming days.) We need to tell the world, “America is open for business again!” And let’s welcome industry by reducing burdensome regulations. The Obama administration keeps strangling businesses in red tape. From the EPA’s rulings to that nightmare known as Obamacare, the Obama administration is hanging one regulatory albatross after another around the private sector’s neck. Let’s get government out of the way and give the private sector room to breathe, grow, and thrive. We can provide businesses confidence to expand and hire Americans in a stable environment.

Be wary of the efforts President Obama makes to “fix” the debt problem. The more he tries to “fix” things, the worse they get because his “solutions” always involve spending more, taxing more, growing government, and increasing debt. This debt problem is the greatest challenge facing our country today. Obviously, President Obama doesn’t have a plan or even a notion of how to deal with it. His press conference today was just a rehash of his old talking points and finger-pointing. That’s why he can’t be re-elected in 2012.

Our economic news is disheartening and the task before us can seem daunting, but we must not lose our sense of optimism. People look around today and may see only the negative. They see a culture and a nation in decline, but that’s not who we are! America must regain its optimistic pioneering spirit again. Our founders declared that “we were born the heirs of freedom.” We are the heirs of those who froze with Washington at Valley Forge, who held the line at Gettysburg, who freed the slaves, carved a nation out of the wilderness, and allowed reward for work ethic. We are the sons and daughters of that Greatest Generation who stormed the beaches of Normandy, raised the flag at Iwo Jima, and made America the strongest and most prosperous nation in the history of mankind. By God, we will not squander what has been given us!

Our destiny is still in our own hands if we pick ourselves up and act responsibly and quickly. We must all get involved. Concerned Americans must seek truth, work harder than ever, and be willing to sacrifice today to ensure freedom tomorrow. Please get engaged in 2012 electoral politics and support experienced, vetted, pro-free market fiscal conservatives who will dedicate all to preserving our Republic and protecting our Constitution.

- Sarah Palin

as posted by Sarah Palin on Monday, August 8, 2011 on her FaceBook.

Out here in proverbial politico flyover country, we little folk are watching the debt ceiling debate with great interest and concern. Today I re-read the open letter I wrote to Republican Freshman Members of Congress in November 2010, just days after they were ushered into office in an historic landslide victory due in large part to the activism of commonsense patriots who are considered part of the Tea Party movement. I respectfully ask these GOP Freshman to re-read this letter and remember us “little people” who believed in them, donated to their campaigns, spent hours tirelessly volunteering for them, and trusted them with our votes. This new wave of public servants may recall that they were sent to D.C. for such a time as this.

The original letter is pasted below, with added emphasis to certain passages that I feel are especially relevant to the current discussion.

All my best to you, GOP Freshmen, from up here in the Last Frontier.

Sincerely,

Sarah Palin

P.S. Everyone I talk to still believes in contested primaries.

******

November 13, 2010

Welcome to all Republican Freshmen and congratulations!

Congratulations to all of you for your contribution to this historic election, and for the contributions I am certain you will make to our country in the next two years. Your victory was hard fought, and the success belongs entirely to you and the staff and volunteers who spent countless hours working for this chance to put government back on the side of the people. Now you will come to Washington to serve your nation and leave your mark on history by reining in government spending, preserving our freedoms at home, and restoring America’s leadership abroad. Some of you have asked for my thoughts on how best to proceed in the weeks and months ahead and how best to advance an agenda that can move our country forward. I have a simple answer: stick to the principles that propelled your campaigns. When you take your oath to support and defend our Constitution and to faithfully discharge the duties of your office, remember that present and future generations of “We the People” are counting on you to stand by that oath. Never forget the people who sent you to Washington. Never forget the trust they placed in you to do the right thing.

The task before you is daunting because so much damage has been done in the last two years, but I believe you have the chance to achieve great things.

Republicans campaigned on a promise to rein in out-of-control government spending and to repeal and replace the massive, burdensome, and unwanted health care law President Obama and the Democrat Congress passed earlier this year in defiance of the will of the majority of the American people. These are promises that you must keep. Obamacare is a job-killer, a regulatory nightmare, and an enormous unfunded mandate. The American people don’t want it and we can’t afford it. We ask, with all due respect, that you remember your job will be to work to replace this legislation with real reform that relies on free market principles and patient-centered policies. The first step is, of course, to defund Obamacare.

You’ve also got to be deadly serious about cutting the deficit. Despite what some would like us to believe, tax cuts didn’t get us into the mess we’re in. Government spending did. Tough decisions need to be made about reducing government spending. The longer we put them off, the worse it will get. We need to start by cutting non-essential spending. That includes stopping earmarks (because abuse of the earmark process created the “gateway-drug” that allowed backroom deals and bloated budgets), canceling all further spending on the failed Stimulus program, and rolling back non-discretionary spending to 2008 levels. You can do more, but this would be a good start.

In order to avert a fiscal disaster, we will also need to check the growth of spending on our entitlement programs. That will be a huge challenge, but it must be confronted head on. We must do it in a humane way that honors the government’s current commitments to our fellow Americans while also keeping faith with future generations. We cannot rob from our children and grandchildren’s tomorrow to pay for our unchecked spending today. Beyond that, we need to reform the way Congress conducts business in order to make it procedurally easier to cut spending than to increase it. We need to encourage zero-based budgeting practices in D.C. like the kind fiscally conservative mayors and governors utilize to balance their budgets and reduce unnecessary spending.

There in the insulated and isolated Beltway you will be far removed from the economic pain felt by so many Americans who are out of work. Please remember that if we want real job growth, we must create a stable investment climate by ending the tidal wave of overly burdensome regulations coming out of Washington. Businesses need certainty – and freedom that incentivizes competition – to grow and expand our workforce.

The last thing our small businesses need is tax hikes. It falls to the current Democrat-controlled Congress to decide on the future of the 2001 and 2003 tax cuts. If it does not permanently renew all of them, you should move quickly to do so in the new Congress. It would remove from households and businesses the threat of a possible $3.8 trillion tax hike hitting all Americans at the worst possible moment, with our economy struggling to recover from a deep recession! You must continue to remind Democrats that the people they are dismissing as “rich” are the small business owners who create up to 70% of all jobs in this country!

Another issue of vital importance is border security. Americans expect our leadership in Washington to act now to secure our borders. Don’t fall for the claims of those who suggest that we can’t secure our borders until we simultaneously deal with the illegal immigrants already here. Let’s deal with securing the border first. That alone is a huge challenge that has been ignored for far too long.

On foreign policy and national security, I urge you to stick to our principles: strong defense, free trade, nurturing allies, and steadfast opposition to America’s enemies.  We are the most powerful country on earth and the world is better off because of it.  Our president does not seem to understand this. If we withdraw from the world, the world will become a much more dangerous place. You must push President Obama to finish the job right in Iraq and get the job done in Afghanistan, otherwise we who are war-weary will forever question why America’s finest are sent overseas to make the ultimate sacrifice with no clear commitment to victory from those who send them. You should be prepared to stand with the President against Iran’s nuclear aspirations using whatever means necessary to ensure the mullahs in Tehran do not get their hands on nuclear weapons. And you can stand with the Iranian people who oppose the tyrannical rule of the clerics and concretely support their efforts to win their freedom – even if the President does not.

You need to say no to cutting the necessities in our defense budget when we are engaged in two wars and face so many threats – from Islamic extremists to a nuclear Iran to a rising China. As Ronald Reagan said, “We will always be prepared, so we may always be free.” You will also have the opportunity to push job-creating free trade agreements with allies like Colombia and South Korea. You can stand with allies like Israel, not criticize them. You can let the President know what you believe – Jerusalem is the capital of Israel, not a settlement. And for those of you joining the United States Senate, don’t listen to desperate politically-motivated arguments about the need for hasty consideration of the “New START” treaty.  Insist on your right to patient and careful deliberation of New START to address very real concerns about verification, missile defense, and modernization of our nuclear infrastructure. No New START in the lame duck!

You can stand against misguided proposals to try dangerous, evil terrorists in the US; precipitously close the Guantanamo prison; and a return to the failed policies of the past in treating the war on terror as a law enforcement problem. Finally, you have a platform to express the support of the American people for all those around the world seeking their freedom that God has bestowed within all mankind’s being – from Burma and Egypt to Russia and Venezuela – because the spread of liberty increases our own security. You, freshmen lawmakers, can and will be powerful voices in support of foreign policies that protect our interests and promote our values! Thank you for being willing to fight for our values and our freedom!

In all this, you should extend a hand to President Obama and Democrats in Congress. After this election, they may finally be prepared to work with Republicans on some of these issues for the good of the country. And if not, we will all be looking forward to 2012.

Remember that some in the media will love you when you stray from the time-tested truths that built America into the most exceptional nation on earth. When the Left in the media pat you on the back, quickly reassess where you are and readjust, for the liberals’ praise is a warning bell you must heed. Trust me on that.

I and most Americans are so excited for you. Working together, we have every right to be optimistic about our future. We can be hopeful because real hope lies in the ingenuity, generosity, and boundless courage of the everyday Americans who make our country exceptional. These are the men and women who sent you to Washington. May your work and leadership honor their faith in you.

With sincere congratulations and a big Alaskan heart,

Sarah Palin

as posted by Sarah Palin on Thursday, July 28, 2011 on her FaceBook.