Concern that Washington can’t control rising debts or create enough jobs to spur growth contributed to the crash as did the loss of America’s pristine AAA credit rating. Rising fears about Europe’s debt woes made matters worse.
The S&P 500 is down 17.9 percent from its late April peak.
Consumer spending makes up about 70 percent of the U.S. economy and economists fear steep stock declines will have a psychological impact on households, causing them to cut spending, and force businesses to defer hiring and spending.
Miami store clerk Antonio del Valle said he blamed former President George W. Bush for the current woes. “If he hadn’t wasted all that money on the wars in Iraq and Afghanistan, we wouldn’t be discussing the debt ceiling,” he said.
A decade of war in Afghanistan and eight years in Iraq have hurt the national budget and the 2008 financial crisis, with its resulting bailouts to stop a global financial collapse, led to less aid flowing from Washington to U.S. states.
As a result, working Americans were squeezed as U.S. states and municipalities hiked charges on everything from water to property taxes. Meanwhile, with inflation low and unemployment high, employers cut jobs, kept pay raises to a minimum and passed on soaring health insurance costs to employees.
Sammy Rubin, a 64-year-old electrical contractor in Birmingham, Alabama, blames politicians. A self-described conservative, he said he was angry at recent political fighting over the debt ceiling.
“If I had the power, I would freeze every congressman’s bank account … and make them go get a job, to see what it’s like out here. And I wouldn’t care if the whole government shut down, except for the military,” he said.
The debt debate in Congress has strengthened the case of those who think the two-party system is failing. According to a CNN poll last week, 77 percent of Americans say that elected officials in Washington have behaved “like spoiled children” in the tug-of-war over raising the debt ceiling.
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