Remember when the president suddenly offered the Republicans a grand bargain on deficit reduction and put entitlements on the table if the Republicans would only consider eliminating tax loopholes for private jet owners and other millionaires? Remember how so many progressives howled about the betrayal? Imagine what the world would like today if the president had not taken that step.
A cornerstone of the global financial system was shaken Friday when officials at ratings firm Standard & Poor’s said U.S. Treasury debt no longer deserved to be considered among the safest investments in the world.
S&P removed for the first time the triple-A rating the U.S. has held for 70 years, saying the budget deal recently brokered in Washington didn’t do enough to address the gloomy outlook for America’s finances. It downgraded long-term U.S. debt to AA+, a score that ranks below more than a dozen governments’, including Liechtenstein’s, and on par with Belgium’s and New Zealand’s…
…The downgrade from S&P has been brewing for months. S&P’s sovereign debt team, led by company veteran David T. Beers, had grown increasingly skeptical that Washington policy makers would make significant progress in reducing the deficit, given the tortured talks over raising the debt ceiling. In recent warnings, the company said Washington should strive to reduce the deficit by $4 trillion over 10 years, suggesting anything less would be insufficient.
Negotiations to reach that threshold collapsed, and political leaders instead agreed to a last-second deal to cut the deficit by between $2.1 trillion and $2.4 trillion, making a downgrade almost unavoidable. When the $4 trillion deal fell apart, some Obama administration officials immediately warned that a downgrade from S&P was a real possibility.
You have probably been subjected to an endless litany from progressives that this was all a fake crisis and that we don’t really have a debt problem. That was never true. We do have a debt problem. We have a debt problem because Standard & Poor has come to the conclusion that we’ll never be able to raise revenues. The Republicans’ ideology has ruined our credit rating. The president could have been blamed for this downgrade if he hadn’t shown a willingness to put entitlements on the table. In that case, both sides would be equally to blame. But the president wisely took the necessary action to protect our credit rating, and he was rebuffed when Eric Cantor and then John Boehner walked out of the negotiations.
These are the same people who got furious when we didn’t allow the financial system to collapse, who pretended that we could have done nothing about the mortgage meltdown, and that the claims that we were facing a crisis if the government didn’t act were just a scam to enrich “the banksters” – who, by the way, were being given, not loaned, money “no strings attached” – and the whole thing would have just blown over if we’d done nothing.
“You’ve got to remember that these are just simple farmers. These are people of the land. The common clay of the new West. You know… morons.”
One-trick ponies who know what they hate and don’t want to know anything else.
What?
Reading this post it sounds like you are endorsing the action of the S&P and assuming it is rational.
Clearly you skipped some of the required reading for progressives. Read Krugman’s blog for today as well as the links.
Remember, the S&P raters are the same idiots who insisted there was no housing bubble and gave all those toxic securities great ratings. They are right-wing ideologues, nothing else.
I’m not reading BooMan as endorsing this action OR saying it’s rational. My interpretation is that he’s saying whether or not it is rational or right is beside the point, because regardless of the legitimacy of the credit agencies they do have real power and there are real consequences to their decisions. We can sit here all day and discuss why it shouldn’t be so, but that doesn’t change the simple fact that it is.
However, wrong S&P is they are right about the dysfunction and that needs to be the headline. Republican obstruction is creating economic destruction…that’s the main message here.
Well, if the cnn.com comments section is any reflection of public sentiment (a dubious assertion, I know), the message is getting across loud and clear.
On a story about the GOP Presidential candidates’ predictable blaming of Obama for the S&P downgrade, the comments are running overwhelmingly against the Republicans and especially the Tea Party zealots as being the ones responsible, not the President (and, spoken of to a lesser degree, not the Democrats). The usual elephantine apologists are vastly outnumbered.
One comment I particularly enjoyed:
their record really doesn’t matter. And actually I think on a longer term basis they are right.
It takes 60 votes in the Senate to do anything. Does anybody think serious long term deficit reduction is going to happen before 2013? Moreover, with the number of seats we are defending, even if we win in 2012 we are going to be back at step 1 in 2013.
The long term fiscal soundness in the United States is uncertain given the political situation.
Does anybody really disagree with that?
.
I Fervently Disagree with Krugman. Surely with credit-ratings there is often a political undertone. The US government has profited from their ‘good standing’, however in the last decade the economic policy has been a disaster because of tax revenue loss and increased war spending. The US should have lost their AAA rating in the year 2008. Can you imagine how Washington would have reacted? The US empire got the AAA rating in 1917, the collapse has taken shape within a single century. Some more observations ….
See my diary – US Downgrade Long Overdue!
SOCIAL POLICY & U.S. POVERTY 1960-1999:
An Economic History [pdf]
"But I will not let myself be reduced to silence."What I said last week is that we should believe the President when he says he’s willing to put SocSec and Medicare/’caid on the table, and that it wasn’t just a political bluff. Now, was I correct in that opinion or not? BC the impression I got from the responses to my ponderings is the consensus here is that PBHO would never have offered if he thought the GOP would accept.
Now this is looking like having it both ways in the PBHO apologist (and I apologize for that term, I can’t think of a more accurate one atm) camp. I’m not huffing and puffing, I’m not calling the President a sellout, I just think he was ready to go large on that debt deal and he for sure would have taken cuts to “entitlements” and hikes to eligibility age if the GOP had been willing to play ball. I don’t think he bluffs, I don’t think he postures, I don’t think he lies–at least as a matter of commission, or not any more than a person at his level of responsibility has to.
So was my assessment wrong, and if so, why?
He put entitlement reform on the table; but not cuts to beneficiaries just the providers.
He was fighting to protect SS and Medicare and Medicaid but make small changes to keep them solvent while attacking the larger issue; our defense budget and tax structure.
So, no I don’t think Booman is an apologist or this gibes with what we thought was playing out.
Perhaps the reform he had in mind was lifting the wage limit for social security taxability. I didn’t see specific reforms mentioned anywhere.
really wanted the deal, and I think he thought he could get one.
The reality is I think he thought he had a deal.
I have the same recollection. You know, being told that Obama “wouldn’t give away the store like he was if he thought he could get a deal.”
It’s not that he wouldn’t have made a deal. It’s that he knew the Republicans couldn’t deliver one. That made it easier to sweeten the pot.
There were clearly factors at play we didn’t understand because Nancy Pelosi stood with the President when he made this play; pushing back cuts on entitlement but keeping open the idea that she would back reforms.
We didn’t know it at the time; but the crisis was worst than we had understood and Boehner clearly knew and walked away from the deal anyway. That’s the huge thing; and what the political press is loathe to call out at this point. But the Republicans have worked to trash the full faith and credit of the USA and then bragged that they’d do it again and again.
This is political gold on the level of the Ryan budget if Democrats would lay out the case; because the MSM won’t report until you state the story. That’s how “journalism” works now.
Booman-
I totally agree with your evaluation and conclusion here. But can you put it on a bumper-sticker? How do we sell this complicated issue to the American Idiots (aka “independent” voters?) You can’t. The republicans are already all over this, blaming it on Obama and Geithner.
In politics, perception is always more important than reality. And it seems the perception is already shifting away from the truth to the bumper-sticker, three word slogan-makers, who ALL work for the Republicans.
As always, we will win the debate among intellectuals. But we all know that probably 70% of the country despises those “know-it-alls.” So we may be all alone unless our President takes to the bully pulpit, accuses S&P of Treason and turns this thing around on the Republicans. He may lose a few “friends” in the process. But he doesn’t know how to tell the difference between friend or foe, apparently. He’s always trying to win over those that absolutely despise him, while ignoring his old friends.
Welcome your new President, Rick Perry. With VP Bachmann. Cuz they’ve got the “common sense” stuff down pat. And Jesus endorsed them.
At least that’s how I feel about this now. It could change.
Talk me down.
has been that if the economy remains stagnant Obama will not get re-elected, and I see little that suggests we will see a substantial reduction in unemployment (that appeared possible in January). Most of the indicators (right track/wrong direction) in ordinary times would suggest Obama is toast.
But I am not so sure I am right. The Quinipiac Poll found people disapproved of Obama’s handling of the economy 38-56. But it also found signigicant disapproval for republicans, and that people blamed Bush for the recession by 2 to 1.
The farther right the GOP candidates go, the easier it will be to tie them to the debt ceiling debacle.
So I think we may have a fighting chance in 2012. It will not be pretty, though.
I agree. It could be tough and we have to look at state-by-state polling instead of national polling to see how we’re doing. The know-nothings tend to live in clusters.
I have a hard time seeing certain Western and Northeastern states going for Republicans inder any circumstances. But how will states like Ohio or Pennsylvania or Florida vote?
FL is an interesting case. They have a lunatic in Scott as Gov, who was in a previous situation fined HUGE for Medicare fraud. Now he is basically destroying the state.
OH has Kasich, who has the second-lowest rating as a new Gov (after the moronic lunatic felon Scott). He has passed a “bash-the-teachers” law, which has now been set up for a state-wide referendum.
Other states with Repuke governors (MI, WI, PA, TN, NJ) have been given a “taste of the lash” and are finding it not to their liking. These states should all go Dem in 2012, thanks to the Repuke-ALEC insanity.
BUT, it all depends on Democrats DRAWING THE LINES so that people can read them.
I have little confidence that Democrats can manage a relatively simple PR campaign because they don’t even understand the numbskulls that they need to reach, much less are they able to generate a message that will be memorable for them. And they don’t understand the power of repetition of the message.
We hate propaganda. We hate the very idea of using it on defenseless morons. But the other side knows this little trick and they play this card first and last every single time. And it often works.
Let’s hope people are building a natural resistance to this form of manipulation after being screwed so many times. I’ve seen it happen in some smaller campaigns.
Watch and see, I guess.
You can hope, but it won’t happen. The message discipline of the Repukes and the failure of any Dems except Schumer and Weiner to actually bring it to the Repukes means that most people hear only one side. And since Dems refuse to level charges at the same level, the math is simple:
(0 + 100000) / 2 = 50000
If we don’t uphold our end (0) and they say 100000 lies, the public goes halfway, and we shift the Overton window.
Why does Obama not understand that
(bipartisanshit + R-partisanshit) / 2 = R-partisanshit/2
.
"But I will not let myself be reduced to silence."They have their crooked Governor to blame for thism not the President. That governor even turns down FREE federal money for high-speed rail lines that the people would love and would create many many jobs because he prefers to drive his car and it’s a waste of money, he thinks. What a fool.
As if the GOP hasn’t been trying to blame Obama for everything under the sun for years now. This is really nothing new.
The PResident is being reasonable and the GOP is not.
Hopefully the voters will continue to see that he is the reasonable one and that the R’s are the crazy ones. They do seem to see this now. But things can change.
The controversy surrounding this ugly bill is alot like the healthcare bill controversy. The Republicans capitalized on that one by keeping the insanity (and lies) going for a year. But can we keep it (the truth) going long enough for the American Idiots (aka “Independent” voters) to remember it and take it out on the R’s at the polls? That is the question.
I’m hearing on the teevee that “No one wants to know whose fault this is, they just want it fixed. And the burden’s on the President.” And it’s also his fault that no one has a job.
It’s maddening.
Bumper sticker:
GOP Debt Ceiling Drama Cost You $322.
No more than 3 words, please. Otherwise you sound like an egghead Liberal who shouldn’t be listened to.
Those who only know how to use their reptile (fight or flight) brain can only remember or process things presented in small samples. This is why phone numbers, credit card numbers, etc are broken up into pieces with none being longer than 4 digits. Same with slogans. They have to be three words or less or they’re ineffective with the alligator-brainers.
People who routinely use their higher brain functions have no trouble with bigger concepts because they process them as visual images. But these folks are pretty rare (maybe 20-30% of all people, tops.) They are ridiculed by the alligator-brained idiots as “egghead Liberals” and other lovely names.
But slogans that might work for you or me just aren’t going to be effective on the knuckle-draggers because they are literally incapable of processing it.
Republicans Fail
Republican Failure
Republican Sabotage
Republican Treason
Substitute Tea Party for Republican, rinse, repeat.
Rinse, repeat.
Repeat.
Repeat.
Repeat.
Repeat.
You asked: but can you put it on a bumper sticker.
How’s this for a start?
“We lost our AAA rating because the Republicans wouldn’t compromise.”
10 words won’t fit on a readable bumper sticker and won’t be memorable for a lizard-brain. See above.
How about this?
AAA in a circle with a line through it
+
because Republicans wouldn’t compromise
Oh, I see you asked for 3 words.
“Republicans wouldn’t compromise”
+
AAA graphic (circle with line through it_
That night make people think you hate the American Automobile Association. They’re actually a pretty cool organization. I don’t think they’d understand you real point.
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Cross-posted from my diary – US Downgrade Long Overdue!
"But I will not let myself be reduced to silence."In late 2009, December 2009 to be precise, five members of the Democratic caucus (4 Democrats, 1 independent) held the debt ceiling increase hostage for the creation of the Deficit Commission (Simpson-Bowles – the listing order tells you everything) and backing off of the public option. Those Democrats were:
Joe Lieberman
Evan Bayh
Kent Conrad
Diane Feinstein
Mark Warner
Their defection marked the surety of a “bipartisan” filibuster against raising the debt ceiling.
Let’s be clear that Obama never toyed with anything. It was extorted by members of his own party. It is impressive how much cover the President has given Democrats in Congress — at the expense of his own political capital.
And here we see it once again. Dick Durbin was putting lipstick on the pig of the Gang of Six this week on the Daily Show, but I don’t buy his reasonable explanation. As majority whip, he was there to report what this rump group was doing. That’s what I mean by “giving cover”.
Two labels, for three parties — especially in Congress.
Democrats who are Democrats
Democrats who are Republicans
Republicans who are Republicans. [1]
Coalition, or permanent minority. That’s the menu of choices.
[1] There used to be Republicans who are Democrats when I was a lad, but they’re extinct.
But, you seem to forget the GOP walked away from the debt ceiling talks every time because of the Grover Norquist no tax pledge. Obama was not extorted by members of his own party…but extorted by an unelected lobbyist. As long as Grover controls any conversation about how we address America’s debt, there will be no progress.
No-taxes-new-or-increased-ever is a fundamental tenet of two of the three parliamentary parties, the Democrats who are Republicans, and the Republicans who are Republicans.
Kent Conrad, Max Baucus, Ben Nelson, Joe “Nighthorse” Manchin, Mary Landrieu, Mark Pryor…
The GOP’s unanimity was what allowed those five Dems to shake down the President for what they wanted.
If the GOP were divided, the President could have blown them off.
The President did try.
Can we please remember that S&P is the agency that rated as Triple A all the crap that created the Housing Bubble.
The agency made a 2Trillion dollar error. S&P should be ignored. As Paul Krugman says they are just making some stuff up.
The wake up call is for raising revenues to get to a balanced approach which is what the President called for.
That said, this is much less worse than defaulting on the debt which was the tea party position.
and pointing fingers of blame are making themselves look very small.
This is about our country… and the tea party proved it would rather default on the debt than raise revenue.
Marcy Wheeler has a back-of-the-envelope calculation that the downgrade, estimated to cost $100 billion in financing charges, will cost each person (not family, person) a total of $322, assuming that the bond markets respond to S&P’s scoring.
That’s not for what was not cut or for the fact of the debt, but for the political risk of the US government not paying. And if the bond markets do follow S&P, that amount has already been incurred just for John Boehner’s Kabuki Show and not for anything financial. It’s a risk premium.
Nice job of cutting costs for the average taxpayer, Julius. Just brilliant.
Now it’s time for DOJ to open an investigation into the way credit rating agencies make their determinations. S&P rated Lehman’s AAA a week before they declared bankruptcy. And some enterprising progressive member of Congress needs to float the idea of an independent government rating agency for private security issues.
The smell of partisan politics hangs heavy around this S&P rating.
Even Bill Freakin’ Walton tweeted that McGraw-Hill’s CEO(which owns S & P) is a Mittens backer! Yes, that’s right, Bill Walton!! The Grateful Dead lovin’, Hoops HOF’er(and John Wooden disciple)!
Never mind. I was snookered by a fake account.
I agree with you. I just hope the WH can get ahead of the game on the messaging. Because the media only seems to reporting what the R’s are saying. Probably because they’re the only ones talking. Time to come out of the cocoon, Obama. Raise hell. Accuse S&P of playing politics with their power over the markets, question their right to exist and send in the Justice Department/FBI to kick down the doors and confiscate everything in the building. Get other countries to do the same with their foreign offices.
It smells like a coup to me. A well-planned one. Recall all of the meetings Cantor and Boner have had on Wall Street, assuring them that this will work out in their favor ultimately.
But unless either Fitch or Moody’s downgrades as well, this will have zero impact on actual borrowing costs. Already the Chinese are saying that they have no worries, but we could reduce military spending. The Japanese and Brits are holding firm that US debt is the safest investment in the world.
Well Mexico’s credit rating seems to be BBB from my not very skilled perusal of the tubes. So we have a ways to go en route to the Koch bros attaining their goal
Mexico has a history of revolution every hundred years and has repeatedly defaulted on debt. No comparison.
the comparison is Mexico is what the koch bros want usa to look like. large % of impoverished, few services, tiny % of extremely wealthy who won’t pay taxes. largest gap between rich and poor, richest person in the world (Carlos Slim), etc etc. My point is that’s where Koch bros want to take us. and btw no revolution for 100 yrs, and the one before that was kicking the Spanish out, wasn’t a revolution was Independence. (granted one of the motivations was the ancestors of todays extremely wealthy didn’t want the Spanish taking a % of their takings, nevertheless there were rights and self determination issues as well.
The Mexican Elites are scared to death about revolution right now, though. According to the calendar, 2011 is the year for another. The last was 1911 and the previous was 1811. They are DUE for another and the people know it. At least that’s what I read.
But I agree this is where the Koch Bro’s, etc want. They should be careful of what they wish for though. No middle class to buy all of their products. Could be bad for business.
There were worries about observance of the centennial in that regard – but revolutions don’t just happen. it’s verging on a failed state because of corruption (not everywhere though) and the absence of infrastructure – no taxes, no $ to pay a real police force, and no $ to educate the citizenry, voila. I haven’t talked with anyone who really has any ideas what to do. it’s really Koch bros ideal state. the wealthy can pretty much do what they want except they pay alot for private security that doesn’t always work, they or their children get kidnapped and killed anyway. so that’s where we’re going after the states cut fire depts, police, and teachers in order to have the wealthy pay 0 taxes. then we and the Mexicans can walk to Canada to look for work.
How about if the President and Democratic congress in December had allowed the Bush tax cuts to expire and then enacted the Obama middle tax cuts? This could have been avoided.
It’s that Democratic Congress part that’s the weak link in all of this with Kent Conrad chair of the Senate Budget Committee.
I hate to sound a note of optimism when so many Americans are hurting and will be hurt more by the downgrade, not to mention the debt deal itself. But there is tremendous opportunity here to inflict grievous damage to Republicans while helping the ccountry long-term. As the dust settled on the deal, the Repubs are cowing out worse and worse, cemented in the polls now as turncoats. As an interesting Econ professor from Cornell (can’t remember his name) sad on Maddow the other night, the 500 point drop in the Dow had a much more crystalizing effect because it happened in a single day and not over a month. Obama has an open field as Congress disappears for a month; jobs, jobs, returning vets program, infrastructure, jobs. Momentum is building for letting the Bush tax cuts expire like never before–it’s the subtext,along with tea part terrorism, of the S &P downgrade. Jobs and the Bush tax cuts are now the elephant in the room (ha, ha).
It all depends on what Obama says. So far, it is “Bipartisanshit, bipartisanshit” all the way home.
He’s got to take a stand, and PUT IT TO THE REPUKES. Or at least get a plausible person out there to make the clear statement:
THIS IS THE CONSEQUENCE OF REPUKELISCUM ECONOMIC TREASON
agree. seems to me the emphasis on letting the Bush tax cuts expire is a major part of the downgrade. also, calls the Repubs bluff on default won’t have an impact as a kind of threat against their next round of hostage-taking, yet in a way that has a chance of waking up some of the stunned media while there’s still a chance to bring us back from the brink. the koch bros and a few others will profit no matter what, and would love to have the usa look like mexico, but maybe there’s another, larger % of the wealthy who won’t agree. fault lines among the upper income?
I also agree with S&P’s comments about our dysfunctional political system (most notably in the congress.)
HOWEVER, (that’s in caps for a reason)
They, as investment analysts, have no business judging a situation based on current politics UNTIL we miss our first interest payment ever. When it was pointed out to them by the Treasury that they were 2 Trillion Dollars OFF in their discretionary spending estimates, they just said “Whatever. We agree about that. But we’re downgrading you anyway.”
None of us should accept this downgrade as legitimate. It was purely political. They are trying to affect elections here. They have no business doing this and, considering their track record of the last 10 or so years, we should all question their right to exist anymore.
I know you love to bash progressives, but really, how would the world be different? It wouldn’t be. Nothing would be different.
What would be different is that both sides would in fact be responsible, and the public would have to blame the president first and foremost. By getting out aggressively ahead of the game and clearly angering his own base, the president cannot be blamed. He made an effort. The GOP gambled with our credit rating and lost.
I just can’t understand why you would think this.
The GOP would be saying the exact same things if that offer had not been made. The President had already offered a more than fair compromises before that point. I also question how closely the public was paying attention at that point.
The GOP gambled with our credit rating but the country lost.
The public did not pay attention until close to the deadline. That’s why the President’s speeches were timed when they were. The public was wondering on July 30, 31, and August 1, “Is this the end of the US economy?” Because by that point, that was how the media was hyping it.
TeaParty = No tax revenue increase
No tax revenue increase = No AAA
And whose to say that this is a one-time credit rating drop?
Keep giving the dimiishing tea party the upper hand, expect more of the same.
Is the saying “No rest for the weary” or “No rest for the wicked”??
Either way in this case, I guess it’s “No rest for the weary”. Twitter is ablaze that President Obama will be coming back from Camp David early maybe today. Has anyone else heard that?
Look out your windows folks, are pigs flying and/or is the deviling wearing skis….
From twitter: @edhenrytv “Remember President Obama pushed for a “Grand Bargain” that would have cut approximately $4 trillion in debt, but Speaker John Boehner walked.”
I hope that’s the narrative that’s developing. I was worried Boehner would be able to obscure matters with his accusations of bad faith on the President’s part. I didn’t like the President’s strategy of pushing so hard for a bargain with Republicans, but since he’s done it, I want him to at least get credit for it.
” The Pres Tried to Save Our Credit Rating “
This isn’t consistent with what you’ve written before. Earlier you were saying that Obama was making extraordinarily generous offers to Republicans to highlight their intransigence, neither expecting nor desiring them to accept. Now it seems you’re claiming he actually was proposing them in good faith as he was trying to save our credit rating. Or maybe you’re saying he made proposals he knew Republicans would reject so that he would appear to be trying to save our credit rating, and so that Republicans would get the blame when he failed. It’s not clear.
The problem was needlessly tying two very different problems together in the first place. Increasing the debt limit–borrowing to pay off money already spent by Congress–and reducing the deficit are not in any way connected, and had never been in history. But now the precedent has been set, and we’re doomed to years of contention over something that should not be contentious at all–Congress agreeing to actually pay for the programs they’ve officially voted for in the first place. Remember, the President did not come reluctantly to this negotiation; he enthusiastically welcomed it. It was a failure on the President’s part to see what a destructive precedent this would set not only at this precarious time of the nation’s history but going forward forever.
This shit is hilarious! The same damn progressives who were attacking the President just a week ago for putting entitlements “on the table” are now using the President putting entitlements “on the table” as a party defense and a weapon against Republicans to deflect any ownership of this bull shit downgrade. Sellout yesterday and savior today.
What a difference a month makes, eh? Especially because S&P called out the Republicans by name as having created the crisis.
Then used the fact of the crisis to argue political uncertainty led to the downgrade.
well you heard it here first,
I don’t think these are the ‘same’ progressives.
What I meant was they’re beginning to see it the way you laid it out and we have been discussing it here. too terse perhaps, traveling, not much online time. seeing good ppl but a lot of sadness here in our usofa.