Sunday, August 7, 2011

America's Credit Downgrade Is Really Tea Party Downgrade



TPM

We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process. We also believe that the fiscal consolidation plan that Congress and the Administration agreed to this week falls short of the amount that we believe is necessary to stabilize the general government debt burden by the middle of the decade.

There it is folks, the republicans have gotten what they've been wanting since January 20, 2009, which is America to fail. The fact that S&P directly references the debt ceiling debacle as a major reason for its outlook is reason enough to blame the Republicans and Tea Party for this situation. While there are reports that the Federal Reserve is pushing back on the downgrade and S&P even admits some calculating issues they are still standing by their decision to downgrade the country's credit rating.

But there is plenty of blame to go around.  The GOP keeps repeating the phrase "failure to lead" in reference to President Obama and in this case I kinda have to agree with them. A leader takes a stand.  A leader doesn't draw a line in the sand (tax revenues a must) then erase it later that week. A leader learns from their mistakes and sizes up their opposition and deals with them accordingly. And time and time again President Obama has extended his hand to the republicans only to see them spit on it over and over again.

The political brinksmanship of recent months highlights what we see as America's governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy. Despite this year's wide-ranging debate, in our view, the differences between political parties have proven to be extraordinarily difficult to bridge, and, as we see it, the resulting agreement fell well short of the comprehensive fiscal consolidation program that some proponents had envisaged until quite recently. Republicans and Democrats have only been able to agree to relatively modest savings on discretionary spending while delegating to the Select Committee decisions on more comprehensive measures. It appears that for now, new revenues have dropped down on the menu of policy options. In addition, the plan envisions only minor policy changes on Medicare and little change in other entitlements, the containment of which we and most other independent observers regard as key to long-term fiscal sustainability.

"The single most important thing we want to achieve is for President Obama to be a one-term president." This statement has been repeated often and emphatically by a variety of republican party members. It was first said by Senate Majority Leader Mitch McConnell and this has clearly been the mission for the last three years. The tactic to achieve this has been to obstruct, filibuster and oppose the Democratic President whenever and as often as possible. And if that means the American people suffer as a result then so be it. Make no mistake, the Republicans are happy that this has happened. They see the downgrade as a black mark on the Democratic President's record and legacy. But history will record that the Republicans used the debt ceiling as a point of contention when historically it was a matter of routine to raise it. And as a result caused enough uncertainty in the country's economic future that credit rating agencies like Standard and Poor's saw fit to drop the country's rating at least one level down. Which can have far reaching repercussions including the possibility of other credit rating agencies, Moody's for example, to follow suit in the future. 
We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process. We also believe that the fiscal consolidation plan that Congress and the Administration agreed to this week falls short of the amount that we believe is necessary to stabilize the general government debt burden by the middle of the decade.
 The credit rating downgrade occurred on Friday, that means come Monday morning the blame laying will be in full swing. Now the President can't be seen finger pointing but his surrogates and allies in the media have to push back against the tsunami of cries from right. The last time the Democrats failed to push back against Republican lies and exaggerations, they got "shellacked" in the midterm elections. The GOP is getting rewarded for their immature behavior.

The case to be made at this point is the only case the left can make. Which is 24/7 relentlessly informing the public of the repeated instances where the Republican/Tea Party has obstructed government and its results. Especially in the debt ceiling debacle. David Brooks said weeks earlier that the Republicans were crazy not to take the grand bargain of three trillion in spending cuts and one trillion in revenues  "If the Republican Party were a normal party, it would take advantage of this amazing moment. It is being offered the deal of the century: trillions of dollars in spending cuts in exchange for a few hundred billion dollars of revenue increases... But we can have no confidence that the Republicans will seize this opportunity. That’s because the Republican Party may no longer be a normal party. Over the past few years, it has been infected by a faction that is more of a psychological protest than a practical, governing alternative." It turns out that the grand bargain or at least some form of it was what Standards and Poor's was basing their analysis on: 



Yes, they were looking for spending cuts but they were also looking for tax revenues (tax hikes) of some sort. The President urged for a balanced approach and what we got was not that. John Boehner triumphantly claimed, “When you look at this final agreement that we came to with the white House, I got 98 percent of what I wanted. I’m pretty happy.” The GOP got "98 percent" of what they wanted, seems to me if you claim victory then you claim responsibility. Also if this was such a great deal according to the Speaker of the House, then why the credit downgrade? Obama at least pushed back and said the downgrade was unwarranted for mathematical reasons, namely a 2 trillion dollar error on their part. The Speaker just used the news to make a political point that the downgrade was proof positive of the failure of the President. But the Republicans got 98% of what they wanted. The Republicans and Tea Party used the debt ceiling as a point of contention. The Tea Party repeatedly said that defaulting wasn't a bad thing and going past the deadline wouldn't be as harmful as most economist claimed. We didn't default but still got a downgrade in our credit rating(so far) from one agency and now those same people want to claim the sky is falling and it's Obama's fault.

One of the biggest points of complaints from the right is that the President didn't embrace the Simpson and Bowles proposal which makes no difference for them since they would have opposed it anyway. Another complaint is that the President didn't present a written proposal himself which again is pointless since it too would have been rejected outright anyway. Its total bullshit for them to act as if the President would have just submitted something in writing then all would be right and a deal would have been struck forthwith. PUHLEESE! 

"The single most important thing we want to achieve is for President Obama to be a one-term president." If this is the republican mandate then compromise is anathema. We saw this before back in December when the then republican minority held the unemployed hostage by threatening to withhold an extension in unemployment benefits in exchange for an extension of the Bush Tax Cuts. Which does nothing but adds to the deficit. How about the oil crisis in the Gulf? Everyone, especially those on the right, screamed loud and long that the President wasn't doing enough, until Obama himself directly negotiated a 20 billion dollar settlement for damages to the people and environment. What was the response from the Republicans? Howls of dismay and cries of foul play. Michelle Bachmann called it "a shake down", Texas Representative Joe Barton apologized to BP for the deal. A US politician apologizing to a foreign company in his official capacity for a deal that benefits the American people.

And lets not forget that "Obamacare" is originally a right-wing healthcare idea including the mandate to force everyone to join. Obama has bent over backwards more often than not, much to the anger and dismay of his base, in negotiating with the right and they have steadfastly rejected and opposed anything that was brought to them, even when it was their own idea. At this point the GOP is more concerned with damaging the record of the American President than they are with dealing with the real problems of the country. Sure they talk about reigning in spending but these are the same guys that allowed runaway spending in the first place. Remember two wars and Medicare Part D, all of which weren't paid for. And if the mandate and mantra is to make sure Obama is a one term President then there can be no compromise.

If there is a grand bargain and significant cuts to the deficit, the President wins. If unemployment ticks down, the President wins. If there is progress and teamwork in congress, the President wins. If the President wins in those situation the American people win. The Republican Party's mission is to deny the President any wins. in doing that, the American people suffer. And as we've seen on at least two occasions, the GOP has no problem with the people suffering if it achieves their goals.

But hopefully the American people are waking up to see the Republican agenda and how its affecting them. With recalls happening in Wisconsin and the popularity of the Tea Party waning as well as job approval numbers for congress at an all time low, people are starting to see how much damage the zealots on the right are causing to the progress of the country.

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