Dumbfounded

"S&P has shown really terrible judgment, and they've handled themselves very poorly." ~Treasury Secretary Timothy Geithner on the downgrading of the US credit rating

This statement really confuses me.

The United States almost defaulted on its debt payments.

The only reason there was not a default is because some legislators worked to ensure the debt ceiling was raised so we did not default.

The result of this means that the country does not deserve to be held in the highest credit regard.

If I use this example as an individual, it would go like this:

Person X has about $150k of debt. They cannot currently afford to make payments on all of their outstanding obligations. But a part of the debt is from frivolous spending: mani-pedis, lavish shopping sprees, expensive meals out, and other luxury items. How should Person X solve this problem? They should cut back. No more meals out. Buy a bottle of nail polish and do your own mani-pedi. Start shopping at Target or WalMart and only purchase what is needed. Start selling off unnecessary items on CraigsList and eBay. If Person X sets a budget and sticks to it, the debt will slowly go away.

Person X should not call the credit card companies and banks to ask for more loans and higher limits.

If Person X defaults on payments and constantly asks for more extensions and raises, their credit rating will go down.

They are no longer a person with good credit.

I don't think anyone will dispute this concept.

So why is the United States so surprised this is happening to us?

I am a CPA. I'm the Controller of a start-up company and work with my brother-in-law, J, to help him with the books of his small business. In order to control spending, I set him up with a budget. And I gave him these explicit instructions:

"J, just because there is a budget doesn't mean that you can spend all of this money. If we've budgeted $250 for office supplies for August, don't think you *have* to spend it. If you don't spend the entire $250, then think - you've saved the company some money."

Maybe the government should start thinking this way.