House GOP sabotaged America's Credit Rating
Posted on Saturday, August 06, 2011 at 09:32 AM
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That's the conclusion that most economic observers and Wall Street have just come to about the debt ceiling mess.
In response to this perception - and to the recent dangerous power plays to damage the president in Washington - Standard & Poor yesterday historically downgraded the United States of America's credit rating from AAA to AA+.
The agency was responding to Washington's apparent complete inability to reach an agreement on how to address the large fiscal gaps in our economy, or how to align revenues with spending commitments.
Closing the financial gaps, it is generally accepted, will require tax increases and the closure of tax giveaways to the rich, otherwise the money can simply not be raised. Remember that today taxes as a percentage of GDP are at historic lows and corporate tax receipts as a percentage of GDP are also at historic lows.
Not so, say the Republican party, who have now elevated tax cuts to the realm of a near religious faith. Taxes, they claim, should never go up - only down. It makes perfect sense to them that CEO's and hedge fund managers should pay lower tax rates than high school teachers. We should never return to the dark days of the 1990's or the tax rates of that era, they cry.
Add to that insuperable creed a blanket refusal to compromise with Democrats on any major legislative issue - and add a general Tea Party contempt for a working government and its international relations and commitments - and yesterday's downgrade can be seen for what it is: cold water over the faces of suicidal ideologues.
Everyone in America, from fiscal reform groups to the general public, had accepted that spending cuts and tax increases were inevitable. But Congressional Republicans now believe that anything that is requested by President Obama must be refused by them, regardless of the ultimate cost to the nation.
The result was a modest deal composed of spending cuts - and even that was opposed by a sizable number of Congressional Republicans.
In seeking to the end the Obama presidency Congressional Republicans have overreached and brought about an end to the American Empire instead.
(Tea Party members cheer after being blamed for the Credit downgrade)
55 comments
jamthecat | Aug 07, 2011, 12:06 PM EDT
The GOP took hostages and behaved like terrorists, making ludicrous demands that had no basis in reality. Obama caved, over and over, even as their demands increased to the point of the ridiculous. And now the US is being ruined as well as lectured by S&P, who have yet to be right about anything when it comes to rating government bonds. This would be comical if it didn't mean disaster to so many Americans. What's truly diseased is how the Tea Party demanded this nonsense, even though they will be hurt by it, as well. Stupid. Stupid. Stupid.
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tempranillo | Aug 07, 2011, 10:23 AM EDT
S&P are imperious whores, looking for a marketing advantage. Their assessments are tired shibboleths that no one trades on---probably the only group whose assessments warrant greater scorn are TV weathermen.Once again, S&P closes the door after the horse leaves the barn. The feckless bas***** are masters of that arcane art.
With nauseating pomposity, S&P tells us, "In our view, the difficulty in framing a consensus on fiscal policy weakens the government’s ability to manage public finances and diverts attention from the debate over how to achieve more balanced and dynamic economic growth in an era of fiscal stringency and private-sector deleveraging." As if they would have effected the downgrade in a robust economy.
The downgrade to AA , Outlook Negative is both a cynical joke and serious matter. We're not AA either. While we all know we are in a financial mess, I wonder what unintended consequences will heighten uncertainty come Monday. I wonder how "the debate over how to achieve more balanced and dynamic economic growth in an era of fiscal stringency and private-sector deleveraging" is helped.
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BrendaG | Aug 07, 2011, 09:19 AM EDT
Oh yes If you are trying to point fingers at our ecomony I suggest you get your own house in order first along with your Euro comrades. At least we are not bankrupt and begging for bailouts from other countries because we didnt control ourselves from acting like a kid in a candy store !!
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BrendaG | Aug 07, 2011, 09:14 AM EDT
You have been drinking too much of the Obama Kool-
aid. Obama has been his own worst enemy for his refusal to negoiate a real economic package. remember this man never has had a job nor employed workers-we dont think he really gets it.The "rich" as u put it already pay more than 50% of the taxes in the US. How about millions of illegals who drain the system and pay nothing.I work and pay my fair share-but do not want to pay for those who wont.
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EphraimKibbey | Aug 07, 2011, 01:42 AM EDT
Part II - America has never defaulted on a debt and both countries and individuals are bending over backwards to loan us money at the lowest rates. It is the best deal around. We borrow at the lowest rate going, we spend it on stimulus, every dollar spent on stimulus returns a dollar and 61 cents to our GDP. ($1.61/$1.00)X100% = 161% return on our investment or 61% interest. We tax that increase and pay back the loan and the interest on it. I have money invested at 5% but I can borrow at 1%. Should I take money out of my investment to buy something (like a new bridge) or should I keep it invested and borrow what I need? Duh!!! This is really very simple math, people, and it is being corrupted to run Obama out of office at the expense of our country's economy and people's lives. Shame on the GREED! Shame on the inhumanity!
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EphraimKibbey | Aug 07, 2011, 01:37 AM EDT
I can't believe, in 33 comments, that no one mentioned S&P's 2 TRILLION dollar math error in calculating our debt to spending ratio that made it look like our debt was climbing much faster than it, in fact, is. When the error was shown to them, they went ahead and lowered our rating anyway for spite saying that the "brinksmanship" of the recent crisis made them less confident that the Republicans would ever work with the Democrates to solve the financial problem. While we can all agree on that possibility, it is not something that the bond raters have historically used to rate a countries chance of default. The other 2 agencies kept us at AAA but with a negative outlook which sorta says the same thing without the actual downgrade. In general, lets remember that these are the agencies that rated the bundled morgages (what a concept - then the bundlers bet money that they would fail - that was criminal!) as AAA when in fact, they were a few good loans wrapped around a core of losers. As to America's actual solvency, where do you think most of the money lost by world wide markets the last two weeks went for safe keeping - into good old US Treasury Bonds (with what was left over going into gold.)
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hollabackgurl | Aug 07, 2011, 12:35 AM EDT
The extremist Tea Party has minimal public support in the USA but they still managed to hold both the Republican Party and the Democratic Party hostage to their kamikaze economic theory. Now we're really going to pay for their extremism.
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seanomelbourne | Aug 06, 2011, 10:26 PM EDT
People have short memories when it suits them McNamara.
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McNamara31 | Aug 06, 2011, 08:50 PM EDT
AengusOg..."Closer attention, favorite color?" Da? Goldman Sachs chairman Henry Paulson was made Treasury Secretary by the Bush administration and soon after went on to dismantel the "New Deal" financial regulations that had been put in place to protect "us" from another crash of 1929 and subsequent depression.Those are the facts you can easily look them up. Under Paulson/Bush bank debt ratio's were allowed to increase from 12 to 1 up to 40 to 1,feeding the CDO frenzy then the crash of 2008.The mortgage companies could not have taken on the increased debt if the original safeguards had not been changed.
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Skibberrean | Aug 06, 2011, 08:24 PM EDT
DITTO......MotherIrish....You have it completely correct!!
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AengusOg | Aug 06, 2011, 07:29 PM EDT
@hollabackgurl You are certainly correct when you identify payoffs and political corruption as a threat to Democracy. Unfortunately, political office begs corruption. Is it ignorance, naivete, or venality that has President Obama surround himself with so many economic advisors with dirty hands from Goldman Sachs? It is up to ourselves to pay closer attention to the quality of our representatives instead of voting for our favorite color.
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McNamara31 | Aug 06, 2011, 07:20 PM EDT
IC posters, we better get "our" collective act together and realize our problems are bigger than the continual Dem vs Republican banter. The dollar was always considered worldwide as the “safe currency” to run to. We are losing that standard. It's time to return statesmen to Washington to do the real work, kick out the lobbyists, and tell the rednecks our problems are not answered with a simple "no". If our economy goes down we take Europe with us. Then whose left to take “our” place?
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AengusOg | Aug 06, 2011, 07:10 PM EDT
@Hollabackgurl- To recognize that SS is a failed program does not imply abandoning it. At this point in time, abandoning SS is not an option. Limiting the scope of entitlements attached to it certainly seems sensible. Benefits could be limited to those who contributed and their dependents. As for the entitlements many others receive from SS, let the politicians fund them directly through a separate and identifiable welfare program.
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hollabackgurl | Aug 06, 2011, 07:07 PM EDT
No taxes on the wealthy! They need every cent to form corporations, buy politicians, and upend democracy - this costs money!
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