Republicans held a gun to the U.S. economy and threatened to blow its head off if they didn’t get everything they wanted (Explicitly admitted by their Senate leader) . That is well documented (here, here, here). Now that the games they have played may cost the government(tax payers) money it is all Obama’s fault – GOP Tries To Shift Blame For S&P Downgrade Of U.S. Creditworthiness
An ABC News report suggests U.S. officials are prepping for the credit rating agency S&P to downgrade the country’s AAA bond rating to either AA or AA+. This would be a slight reduction stemming from the Congressional circus over the debt limit fight.
According to the initial report, S&P sees the GOP’s intransigence on taxes as a reason to suspect the country will not be likely to reduce deficits in the years ahead, and Republicans are already trying to get out from under the blame.
S%P’s full explanation includes that part of the reason for the downgrade was their fear Congress will not let the Bush tax cuts expire as scheduled in 2013 – “the 2001 and 2003 tax cuts for high earners lapse from 2013 onwards, as the Administration is advocating.” One of conservatism’s deepest thinkers Red State founder Erick Erickson tweets, “Dear Mr. Obama, while you blame the GOP for the downgrade, your party controlled all of Washington for two years & extended the Bush cuts,”. Erick really should cut back on the kool-aid, but he deserves propaganda points for getting so much wrong in such a short space.
The Bush tax cut extension of 2009 was another instance of Republican extortion. In order to get an extension of unemployment benefits for all those people conservatives assume are lazy pigs, Obama gave the Bush tax cuts as ransom.
Control of Washington? From 2088 to 2010 Democrats had a majority in the House. In the Senate Democrats held 56 seats and two Independents caused with Democrats for a total of 58. As everyone, who cares to be honest knows, to pass anything in the Senate – because of the mere threat of a filibuster – almost all legislation requires a super majority of 60 votes. During the health care debate it was obvious that there were some very conservative Democrats opposed to the public option, dropping the Medicare eligibility age down to 55 and even many moderate Democrats were opposed to any public single payer plan ( Ben Nelson(D) almost singlehandley killed the public option. Max Baucus(D) was not particularly helpful as the Democratic point man on health care reform. Republican pundits get away with this kind of over simplification, spin and ingenuousness all the time. Or they really are the know nothing pundits they appear to be.
Why Erickson’s sudden about face about behaving like an adult and understanding the implications of playing games with the debt ceiling. If Congress had followed Erickson and Red State’s advice the U.S. would have defaulted and all three rating agencies would have severely downgraded the nations’ credit rating – Red State, Sunday, May 1st 2011 at 1:28PM EDT, The debt ceiling really doesn’t matter.
We’ve had a whole lot of talk about raising the debt ceiling in the last few months and the conversation, frankly, is mostly just hot air. The US is most likely headed for a financial wall at high speed without regard to action on the debt ceiling and that howling that if we don’t raise the ceiling we’ll damage the “full faith and credit” of the US government is laughable.
The inestimable Gateway Pundit and its chorus of teahadist commenters are ecstatic over Michelle Bachamnn(R-MN) response to the news from S&P – Michele Bachmann: “I Call on President Obama to Demand Resignation of Secretary of Treasury Timothy Geithner” (Video)
Michele Bachmann reacted to the news tonight that S&P downgraded the US credit rating. Bachmann was on with Greta Van Susteren.
“This president has destroyed the credit rating of the United States through failed economic policies and his inability to control government spending… President Obama is destroying the foundation’s of our economy one beam at a time. I call on the president to seek the immediate resignation of Treasury Secretary Tim Geithner and to submit a plan with his list of cuts to balance the budget this year, turn the economy around and put our people back to work.”
Sure going from a AAA rating to a AA+ by one of the big three agencies has “destroyed” the nations credit rating. Yet Bachmann advocated actually destroying the economy by defaulting on the debt ceiling. She even had a petition up demanding that the nations’ credit rating be destroyed. This is the person everyone at Gateway thinks would be the great wise, well informed leader of the country.
“Put our people back to work”? Is she advocating the position that government can and should create jobs. That is a liberal Keynesian position during recessions.
So much for the clown posse. As Matt Yglesias notes this S&P stuff is just another political football. It is just one rating agency and as the TPM link notes S&P based its decision on a $2 trillion math error. As Republicans play blame shift with S&P and the real or not so real consequences of conservatives playing games with the economy it is also worth remembering that all the political and market reactions are because conservative House Leader John Boehner(R-OH) got 98% of what he wanted,
The person who looks bad here, in my view, is John Boehner. President Obama wanted to do a “grand bargain.” The Gang of Six Senators wanted to do a “grand bargain.” And it looked for a moment like Speaker Boehner was going to be part of a grand bargain. But ultimately he decided that he didn’t want to sign a deal that would fracture his caucus, so the grand bargain talks fell apart. And yet the little bargain that did eventually pass the House ultimately couldn’t pass with Republican votes alone. So what did Boehner really achieve? If he was ultimately destined to strike a deal with the White House that needed Democratic votes to pass the House, why not go for the grand bargain? According to Boehner “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.” How happy is he now? (emphasis mine)
Conservatives could have gotten bigger spending cuts and didn’t for a few reasons. Number one being that the best offer on the table had Obama’s name on it. Republicans choose to cut off their nose to spite their faces.
Paul Krugman notes that the rating agencies have been better at serving the interests of Wall St than being objective, S&P and the USA
OK, so Standard and Poors has gone ahead with the threatened downgrade. It’s a strange situation.
On one hand, there is a case to be made that the madness of the right has made America a fundamentally unsound nation. And yes, it is the madness of the right: if not for the extremism of anti-tax Republicans, we would have no trouble reaching an agreement that would ensure long-run solvency.
On the other hand, it’s hard to think of anyone less qualified to pass judgment on America than the rating agencies. The people who rated subprime-backed securities are now declaring that they are the judges of fiscal policy? Really?
Just to make it perfect, it turns out that S&P got the math wrong by $2 trillion, and after much discussion conceded the point — then went ahead with the downgrade.
This is what Krugman is talking about – `Race to Bottom’ at Moody’s, S&P Secured Subprime’s Boom, Bust
“Without these AAA ratings, that would have stopped the flow of money,” says Stiglitz, 65, a professor at Columbia University in New York who won the Nobel Prize in 2001 for his analysis of markets with asymmetric information. S&P and Moody’s “were trying to please clients,” he said. “You not only grade a company but tell it how to get the grade it wants.”
Presidential candidates John McCain and Barack Obama lay responsibility for the carnage with Wall Street itself. The Securities and Exchange Commission in July identified S&P and Moody’s as accessories, finding they violated internal procedures and improperly managed the conflicts of interest inherent in providing credit ratings to the banks that paid them.
S&P and Moody’s earned as much as three times more for grading the most complex of these products, such as the unregulated investment pools known as collateralized debt obligations, as they did from corporate bonds. As homeowners defaulted, the raters have downgraded more than three-quarters of the AAA-rated CDO bonds issued in the last two years.
This is not to say the credit rating agencies deserve all the blame. The agencies – private enterprise entities – were supposed to serve as unbiased watchdogs. Those CDO’s they rated as AAA were junk. You can get the Cliff Notes version in the documentary Inside Job.
In other news:
What Caused The Deficit? A Reply To Megan McArdle. Another attempt by the Right to try to pretend we all traveled through a time machine from 1999 to 2008. Thus conservative economic policies are not, once again, responsible for any of the bad stuff.
Three connected links about the Obama presidency – Obama isn’t weak (he just isn’t a liberal) by David Sirota. There is some I agree with and some I don’t. When it comes down to specific legislation I still think good progressive soldiers like Sirota fail on the math. You either have the votes or you don’t and no amount of push back from Obama would make a difference. The debt ceiling was a good example. Conservatives ended up with less than they were demanding purely out of the desire to spite Obama’s attempts at compromise. SadlyNo contributes their thoughts- The New Incompetence Dodge – ” Moreover, like Ronald Reagan, Obama is fortunate in the stupidity (part hero worship, part battered-wife syndrome) and masochism of a large section of his base; he knows he can slap them repeatedly and they will love him anyway just because of who he is, never mind what he actually believes in, or how he actually governs.” Some good and not so good points. I’m looking ahead to 2012 and thinking yea, damn straight if my only choice is between any of the whackados on the Right and our the Reaganesque Obama, I’ll vote for the lesser evil. Would you rather have another Kagan or Sotomeyer on the SCOTUS or another right-wing judicial activist like Scalia? And Taylor Marsh chimes in on the discussion FEATURE: A Friendly Rebuttal to David Sirota (from the ultimate outsider – a former Clintonite) – “Mr. Obama has no driving dream as a foundation, but is simply a formidable political performer that has the gift of oratory, which has become the facade behind which he stands. He can deliver the words, but has never cared about the deeds required to make those words manifest. He is a political actor, nothing more, which is why compromise is his tool, because he has no ideas of his own for which he’s willing to risk failure to pursue. It’s always about him, never you.” I disagree by degrees if I only go by what I have seen since January 2010. If Marsh had written that in 2009, based on Obama’s record I would have said she was completely off base. All these links have comment sections for those who want to contribute your thoughts.