By Lynn Hatter
http://stream.publicbroadcasting.net/production/mp3/wfsu/local-wfsu-981751.mp3
Tallahassee, FL – Discussion of the U.S. credit downgrade and subsequent market free fall is sparking conversations on what to do about a political impasse in Washington and how to fix the nation's finances. Lynn Hatter reports that conversation is happening across the nation and in Florida, where some counties could see their own credit scores go down.
One of the credit rating firms, Standard and Poor's gave the United States its first ever credit downgrade. But how does this affect Floridians? State Chief Financial Officer Jeff Atwater says, not much.
"Florida was Triple-A before the down grade and its Triple-A today and the ratings agencies just upgraded our longer term outlook."
But that may not hold true for some cities and counties. Standard and Poor's also announced that based on the nation's downgrade, it will start looking at municipal bonds debt held by local governments. Carol Weissert is the head of the LeRoy Collins research Institute. And she says that's where the picture gets murky.
"The counties and the cities and the school districts have taken cuts and there's no end in sight for those cuts. We found that there are a number of cities in Florida that have very large pension liabilities, and these liabilities are one of the things bonding agencies look at.
Weissert says the combined drop in revenue, and pension problems put the cities and counties in danger of debt-downgrades, which make it more expensive to borrow money.
The increased scrutiny on debt comes after a bitter battle in Washington over whether to raise the debt-limit. The last election cycle brought in a wave of Tea Party-backed Republican freshman who insisted on cutting federal spending as a condition of more borrowing. Congress eventually approved a package that cut more than a trillion dollars out of the budget, falling below the $4 trillion Standard and Poor's called for. And freshman Republican Congressman Steve Southerland says he's not surprised by downgrade.
"D.C. is broken and it's broke. I've been very clear that I want to restore some fiscal sanity. I want them to balance their budget. And you can't balance your debt in a year. But we can put America on a plan where over the long term, we can bend the cost-curve down and we won't be guilty of putting our children in a situation where there is taxation without representation."
Southerland, who won his North Florida district with support from the Tea Party, voted against raising the debt-limit because he said it didn't address long-term spending, like Medicaid, Medicare and Social-Security. Former Congressman Allen Boyd, a Blue-Dog Democrat who lost his seat in Congress to Southerland, says the Tea Party has brought to light a problem the nation needed to address sooner than later. But he adds that further cuts have to be balanced with changes to the tax code.
"You can't just do this with cutting domestic spending or cutting Medicare. You have to do that on the tax side as well."
To Republicans, what Boyd is talking about sounds a lot like tax increases. Christian Camara is the President of the Tallahassee Young Republicans.
"Even if we were to raise taxes on the rich by 100-percent we would still be in a serious deficit situation, so obviously raising taxes alone as some on the left have proposed will not go nearly as far as it needs to go."
Lisa Comingore is a past president of the Capital City Gay, Lesbian, Bisexual, Transgender and Ally Democratic Caucus.
"Part of the reason our credit rating was downgraded was because they didn't feel cuts alone were enough to make our economy stronger without also having some cuts in tax breaks. I think we need to look at who is getting the tax breaks. I think everyone needs to give some or we're really going to have a problem."
A new, "Super Committee" has been formed in Congress to come up with a plan reduce the debt by at least another $1.5 trillion. Any change it recommends would go before the full house and senate for a vote, with no amendments being added. The super-committee could look into changing entitlement programs like Medicaid, Medicare and Social Security. Political Scientist Carol Weissert says that's where the money is, and that's where the state could begin to feel the impact of the debt-reductions.
"The Medicaid is the largest one for the state of Florida. It's now a huge portion moving close to a third of the state budget. Social Security and Medicare play a bigger role for our citizens. The problem is, that' where the money is, particularly for Social Security and Medicare. So looking at those programs, there will have to be changes, because that's where the money is."
So, just because Florida isn't feeling the effects of the nation's credit downgrade now, doesn't mean it won't in the future. For WFSU-FM, I'm Lynn Hatter. For Florida Public Radio, I'm Lynn Hatter.