One of the three credit ratings agencies Standard and Poor”s has downgraded America’s credit rating from the gold standard AAA to a less prestigious AA+ . What this means is that America which was once seen as a pristine risk free place to invest is less so. Standard and Poors had informed the Obama Administration of their intention to downgrade, the Administration disagreed with the decision and pointed to what they said was over two trillion dollars of disparity in S&P”s Calculations..
Of note is the fact that the other two ratings Agencies Fitch and Moodies maintained America’s AAA ratings.
In a statement S&P had this to say:
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. We have also removed both the short and long-term ratings from CreditWatch negative. 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’smedium-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.Since then, we have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us pessimistic about the capacity of Congress and the Administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government’s debt dynamics any time soon. The outlook on the long-term rating is negative. 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. www.standardandpoors.com/ratingsdirect.
The debt ceiling has been raised as a matter of course under all recent American Presidents, in fact Ronald Reagan the holy grail of Republican conservatism saw 18 increases on his watch.George Bush the most recent version of Republican Conservatism, had 7 increases on his watch. The debt ceiling has been raised three previous times under President Obama before the brouhaha of the fourth increase, . The difference with the increases under Obama is that they were done to stave off a total collapse of the American economy and potentially that of the entire world financial system.
The debt ceiling was first installed in 1917, at that time the limit was 11.5 Billion, the debt ceiling currently stands at 14 trillion 294 Billion dollars. Since this ceiling was installed the country has seen 74 increases from the initial cap of 11.5 Billion to the present 14 trillion 294 Billion, the ceiling was instituted to control spending , many argue that the debt ceiling is really a fallacy and should not even be there.
Whichever side of the debate you fall here is what’s going on.
Republicans manufactured this crisis, the economy has been sluggish but heading in the right direction, one does not need a Harvard MBA to see this , as a matter of fact we have seen what the last Harvard MBA in the White House was capable of . The economy had been halted from the cliff’s edge, and is actually creating jobs. Republicans know that if the economy continue to improve they could kiss their chances of unseating Obama goodbye.
Interestingly, the talking heads in the media, and specifically those on the round the clock cable networks, fail to point out to the American people, the dangerous game of brinksmanship Republicans were playing, and continue to play with their future, and that of their children. This recklessnes solely to advance their radical agenda of demonizing Obama, and enacting the agenda of the super rich, big banks , and insurance companies.
As was anticipated the republican hate mongers were out first thing saturday morning with their prepared talking points .
Here’s what “bring on default”[ nit wit] Michelle Bachman had to say “
This president has destroyed the credit rating of the United States,” “I call on the president to seek the immediate resignation of Treasury Secretary Timothy Geithner and to submit a plan with a list of cuts to balance the budget this year, turn our economy around and put Americans back to work.”
Missing in action [snake oil salesman] Mitt Romney:
America’s creditworthiness just became the latest casualty in President Obama’s failed record of leadership on the economy,” Former Massachusetts Gov. Mitt Romney said in a statement. “Standard & Poor’s rating downgrade is a deeply troubling indicator of our country’s decline under President Obama. His failed policies have led to high unemployment, skyrocketing deficits, and now, the unprecedented loss of our nation’s prized AAA credit rating
Former Pennsylvania Senator Rick Santorum :
I understand the U.S. Treasury is going back to Standard and Poor’s to say that a two trillion-dollar mathematical error by S&P contributed to the downgrade,” “So, in addition to blaming President Bush for all of its problems, now the White House is blaming S&P – but this happened on the President’s watch – and he has to deal with it.”
Former Ambassador to China Jon Huntsman :
We need new leadership in Washington committed to fiscal responsibility, a balanced budget, and job-friendly policies to get America working again,”.
One whack job after another, they trotted out the same refrain it’ s Obama’s fault !
Did John Huntsman think the president’s policies were fiscally wrong and hostile to job creation ? And if so what does it say about him who opted to work for the president in an Ambassadorial role in china, shouldn’t Huntsman have stood on principle and not accept that appointment ?
The reality is, this problem of a debt ceiling was one manufactured by the far right within the republican party, the wing nuts that pushed even reasonable members of that party into hiding, scared that they may be seen as compromising with Barack Obama .This band of uncompromising zealots went to Washington with what they see as a mandate to stop spending, of course the spending of George Bush was not a problem while he was driving the economy off the brink, it became a problem when Obama needed money to stop the destruction.
Tea party activists in Congress, most of whom have never held elected office, and mostly who do not have any allegiance to the republican establishment of John Boehner and Mitch McConnell do not understand the meaning of Governance. What they understand is the vapid fundamentalist dogma that is the heart of the Tea Party.
Interestingly ,despite all of the activities and the predictable fallout of this artifical crisis, there is really no message coming out from Democrats. For most of Barack Obama’s Presidency , even when democrats had the Senate , House and , the White House republicans seemed to get everything they wanted , essentially governing from the minority. Under Bush there was no shortage of talking heads on Television repeating the same lines and talking points.
Conversely Obama seem unable to get anyone from within his own party to speak up on his behalf , with th exception of Debbie Wasserman Shultz the head of the Democratic National committee. the silent democratic party, to include the black caucus are rendered impotent by the tea party, that has defined them as always , tax and spend democrats.
There is also a burgeoning cadre of black republicans who seem to all parrot the same anti-Obama disdain , some are in talk radio others call themselves republican strategists, of course there is one in the this new republican congress, this brand of self hating[ uncle toms] seemingly do not understand the conflict inherent in, ” black-republican”
Michael Steele found out how much he was worth to them after they took the House of Represantatives , he was gone, kicked to the curb.
Under no other curcumstance would a black man be appointed head of the republican national committe. This was a obvious and transparent counter-weight to the President. They wanted to make sure all of the vitriolic poison coming from them was conduited through Steele (a black man) , with Steele they were insulated from charges of racism . So they held their collective noses, once he achieved their objective he was out of there.
What is clear, is that republicans figure with a growing economy, Barack Obama is unbeatable. They have gambled on the high stakes wager they made: disrupt the economy, create fear , anxiety and trepidation- that is their ticket into the White House. So far they seem to be winning that strategy, hands down.
The President missed a golden opportunity to tell the American people:
The debt was run up by Congress before his time.
All of his predecessors have had the debt increased on their watch as a matter of course.
The debt ceiling was increased on his watch, to stave off financial collapse.
Point out the dangerous game of brinksmanship republicans are playing with the country.
Raising the ceiling was never a problem under any of his predecessors.
Ask the people why they thought it was a problem on his watch.
President Obama continues to lead from behind, he continues to operate under a false premise of compromise with republicans. Unless he wakes up from this three and one half-year euphoria from winning the presidency, and start to Govern, he will join the ranks of the unemployed pretty soon.
have your say: