Monday, August 8, 2011

Speaking Of Downgrades

Jim Geraghty nails it in his daily email blast:

You don't see a lot of late-Friday-afternoon posts, and by Friday evening, the computer is off, the kids are running around, and dinner is in progress. Barring some developments that are impossible to ignore, such as Osama bin Laden being killed, I try to fast from news for 48 hours or so.

Boy, was this a good weekend to avoid the news.

The rumors were out by 5 p.m., but a little after 8 p.m., it was official from Standard & Poors:

We have lowered our long-term sovereign credit rating on the United States of America to 'AA+' from 'AAA' and affirmed the 'A-1+' short-term rating. . . .

The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics.

More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011. . . .

We could lower the long-term rating to 'AA' within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case.

That's a thoroughly depressing -- and no doubt, brutally honest -- assessment.

Naturally, the Obama administration did what it does best in response: They blamed their political opponents.

This was a "tea party downgrade," said [Obama's chief strategist David] Axelrod on CBS News' Face the Nation.

Axelrod said S&P's decision was "largely a political analysis." "And that's what we should focus on because what they were saying is they want to see the political system work. They want to see a sense of compromise. They want to see the kind of solution that the president has been fighting for, a large solution that will deal with the problem, that will be balanced, that will include revenues."

Instead, said Axelrod, conservative, Tea Party-influenced Republicans "played brinksmanship with the full faith and credit of the United States. And this was the result of that."

"It was the wrong thing to do to push the country to that point" he said. "And it's something that should never have happened. And that clearly is on the backs of those who were willing to see the country default, those very strident voices in the tea party."

Of course. Nothing's ever their fault.

Actually, look above at that S&P statement. It doesn't say anything about increasing revenues. In fact, in the full statement, you'll see, "
Standard & Poor's takes no position on the mix of spending and revenue measures that Congress and the Administration might conclude is appropriate for putting the U.S.'s finances on a sustainable footing."

It is revealing that Axelrod can look at this and declare, "They wanted to see revenues."

Doug Powers
has had it:

For the first two years of Obama's presidency, the Democrats, including one John Kerry who now wants everybody to believe he's become a reborn frugalitarian, had full control of the Senate and House. At that point the Democrats could have done anything, including cutting back spending to sane levels (pause for laughter), but instead they went on a wild spending binge and presided over the largest expansion of government since World War II. . . .

Tea Party members of Congress should propose a new round of cuts to match what John Kerry says were on the table just to get to the level of responsible spending these Democrats are trying to have everybody believe they've been after all these years. It would be a nice outreach in the spirit of bipartisanship.

I like Ed Morrissey's analysis:

S&P didn't say anything yesterday that was not common knowledge and common sense. If you had to rate a potential investment that had an income of, say, $22,000 a year but had costs of $37,000 per year, a standing debt of $143,000, and contracted future debt that exceeded $1 million, would you give that investment a gold-plated AAA rating and buy their bonds at the lowest interest rate possible, or at all? Of course not, but that's exactly the fiscal situation of the US, at a 100,000,000:1 scale.

The anger is mainly misdirected. The media wants to blame the Tea Party, but the Tea Party wants to solve the actual problem -- overspending and over-commitment to entitlement programs. The Tea Party wants to blame the Obama administration, and it deserves some blame for refusing to address the real structural problems of the US fiscal condition. But that fiscal structure far predates Barack Obama, both as President and as human being, and Congresses and White Houses of both parties have done little to address the real problems in Medicare, Medicaid, and Social Security.

Why? Because as soon as people try to do so, demagogues accuse them of wanting to push Grandma over a cliff. Voters respond by punishing the reformers and rewarding the demagogues.

Nonetheless, the reckoning is at hand, and we can see who sees this depressing fiscal development as another crisis to not be wasted, another opportunity to demonize the opposition. It's what they've been doing since day one.

I'm reminded of Daniel Hannan's remarks to former U.K. prime minister Gordon Brown, and can't resist paraphrasing: "Soon the voters too will get their chance to say so. They can see what the markets have already seen: that you are the downgraded president of a downgraded country."

In closely related news:

Fewer voters than ever feel the federal government has the consent of the governed.

A new Rasmussen Reports national telephone survey finds that just 17% of Likely U.S. Voters think the federal government today has the consent of the governed. Sixty-nine percent (69%) believe the government does not have that consent. Fourteen percent (14%) are undecided. ...

The number of voters who feel the government has the consent of the governed - a foundational principle, contained in the Declaration of Independence - is down from 23% in early May and has fallen to its lowest level measured yet.

Perhaps it's no surprise voters feel this way since only eight percent (8%) believe the average member of Congress listens to his or her constituents more than to their party leaders. That, too, is the lowest level measured to date. Eighty-four percent (84%) think the average congressman listens to party leaders more than the voters they represent.

Voter approval of the job Congress is doing has fallen to a new low - for the second month in a row. Only six percent (6%) now rate Congress' performance as good or excellent.

This is why I call the current crop of elected Republicans incompetent. We know that elected Democrats are doing their damnedest to remake transform destroy America in terms of the nation it was founded to be, and has been for the past 230+ years. There is enough evidence that anyone with a quarter of a working brain can see that (if they're willing). What is surprising is that there is currently no real counter to their hellbent destructive rampage.

With this kind of dissatisfaction running rampant throughout the country, it should be easy for Republicans to take the path that is both the right thing to do and the one that scores political points.

They're just not doing it.

Here's the key question: in the chaos that is sure to ensue as markets gear up post-downgrade, will anyone in Washington stand up and demand fiscal responsibility, or will we see more panic-induced save-the-world-NOW measures that will just make things worse like we've seen so often over the past two years? TARP, the stimulus, this latest debt deal...all of these have been jammed down the throats of an unwilling and unwanting American public on the premise of being the only possible thing that can avert the impending catastrophe. Of course, none of them have worked, and have only served to make a bad situation worse. Will we get more of the same from our elected 'representatives', or will they finally get real?

Yeah, I'm afraid so, too.

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