U.S. Downgraded to Third World Nation

NEW YORK (TheStreet) -- Yesterday, while millions of Americans waited until the last moment to cheerfully open their veins for Uncle Sam, word came tumbling through the news wires to prove their money was going to a good cause. It was going to the benefit of a needy, bankrupt, slightly shady, poorly governed Third World nation.

That's right, folks, Standard & Poor's made it official when it cut its outlook for the national debt from "stable" to "negative." We are now officially a Third World country. While JPMorgan Chase, Citigroup and Bank of America each report billions in quarterly profit, the country in which they're situated is starting to look like Greece, which may have to restructure its national debt.

I was wondering when S&P or Moody's would finally put their official stamp on what had been obvious for a very long time. We are a country whose word cannot be entirely trusted. Sure, our national debt still has its AAA rating. But there's just a tinge of doubt being expressed by the credit raters. And how can you blame them? If you were sitting in a cubicle on Water Street in Lower Manhattan, where S&P has its headquarters, you'd feel the same way.

It's been pretty obvious for a long time that this country is a Third World nation, but I'll reel off some of the most obvious indicators for anyone who's been living in a cave for the past few years:

We are dominated by a plutocracy of super-rich fat cats. You don't have to go to India, Paraguay or Egypt to find vast income inequality. Nope, we're doing just fine in the income-inequality department right here in the good old U.S. of A. Thanks to an eroding industrial base, tax breaks for the rich and policies that have sent jobs overseas, we now are right down there in the mud with the cruddiest countries around. Now, where am I getting the data to make such a Marxist statement. (I can just see the comments.) The Central Intelligence Agency, that's where.

Just take a look at the CIA's "Gini index," which shows income distribution throughout the world. The higher a nation's Gini index, the more unequal its income distribution. CIA numbers show that the U.S. ranks 40th of 136 nations surveyed, with Namibia being No. 1, the worst, and Sweden No. 136, the best. We're sandwiched between Jamaica and Cameroon.

Now, I don't mind Jamaica -- I'd love to vacation there someday. But Cameroon? The U.S. actually has a worse income distribution than that country and the Ivory Coast, Mali, Tunisia, Russia, China and Iran. We're actually worse than Egypt. But not to worry. Haiti still beats our pants off in the income-inequality department.

Our government is run by a junta of tinhorn dictators. I can't find any CIA Fact Book entry on this, but it's pretty obvious that our government would be the pride of Lesotho, Myanmar or any of the cruddier kleptocracies of our fellow Third World countries. As for evidence of that, well, does the name "Paul Ryan" sound familiar? Purely because he feels that way, because it's the way his mind digests information, a man most Americans have never heard of, but by accident of fate is chairman of the House Budget Committee, has unilaterally decided that Medicare and Medicaid need to be disemboweled. So, by golly, all of our elected representatives have to take his loony, extremist ideas seriously.

But Ryan is just a minor indication of the perversion of democracy in this country. For years, the United States Senate has been ruled by a minority party, the Republicans, through rules that effectively give them veto power over legislation. A supermajority of 60 votes is needed to get anything passed in the Senate.

Thanks to a junta consisting of Senate Republicans and right-wing ideologues in the House, the president, who was elected by a clear majority of the American people, has been thwarted in carrying out his legislative agenda. If that were happening in Libya, Hillary Clinton would be expressing suitable indignation.

We're gun crazy. On Wednesday, the Ohio Senate passed a bill allowing concealed weapons in restaurants and bars. If that is enacted, you can now do what would have gotten you rapped across the puss by Wyatt Earp in Tombstone, Ariz., in 1881. Wyatt wanted to keep Tombstone from becoming a lawless, Third World town, you see. But history has passed him by.

The wealthiest people in America are raiding the Treasury. This brings me back to the S&P action yesterday. We're bankrupt. The national debt has been scientifically estimated to be somewhere in the gazillion-dollar range. Spending has gotten so far out of hand, thanks to military interventions around the world, that Paul Ryan can talk about disemboweling Medicare and people take him seriously. Meanwhile, the super-rich are actually paying less than they did 20 years ago. Since 1992, the average federal income taxes paid by the wealthiest 400 households has declined from 26% to 17%. (That's according to the latest IRS data, which is from 2007.)

Over the same time period, the overall taxes paid by Americans rose from 9.3% to 9.9%. What this means is that the poor and middle class are being shafted, while the rich are effectively raiding the Treasury by not paying their fair share. House Republicans want to cut out some of the tax breaks that the rich use to slash their taxes -- in order to pay for a cut in the top tax rate from 35% to 25%. This will shift an even greater share of the burden of supporting the government on to the backs of the people least able to afford it. But don't worry. The Paul Ryans of Congress aren't going to touch any of the tax breaks that keep the wealthiest Americans in clover. If he did that, we'd lose our Third World status, and we can't have that.

After all, we're a banana republic now. Enjoy it. Go to Banana Republic, buy a white suit, pour some $4.50 gallon gasoline into your SUV and drive down to Washington, where you can pass through metal detectors that would be the pride of any dictatorship and watch our all-American junta in action.

Gary Weiss has covered Wall Street wrongdoing for almost a quarter century. His coverage of stock fraud at BusinessWeek won many awards, and included a cover story, �The Mob on Wall Street,� which exposed mob infiltration of brokerages. He uncovered the Salomon Brothers bond-trading scandal, and wrote extensively on the dangers posed by hedge funds, Internet fraud and out-of-control leverage. He was a contributing editor at Conde Nast Porfolio, writing about the people most intimately involved in the financial crisis, from Timothy Geithner to Bernard Madoff. His book "Born to Steal" (Warner Books: 2003), described the Mafia's takeover of brokerage houses in the 1990s. "Wall Street Versus America" (Portfolio: 2006) was an account of investor rip-offs. He blogs at garyweiss.blogspot.com.

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