By Paul Krugman / New York Times / July 26, 2011
Watching our system deal with the debt ceiling crisis — a wholly self-inflicted crisis, which may nonetheless have disastrous consequences — it’s increasingly obvious that what we’re looking at is the destructive influence of a cult that has really poisoned our political system.
And no, I don’t mean the fanaticism of the right. Well, OK, that too. But my feeling about those people is that they are what they are; you might as well denounce wolves for being carnivores. Crazy is what they do and what they are.
No, the cult that I see as reflecting a true moral failure is the cult of balance, of centrism.
Think about what’s happening right now. We have a crisis in which the right is making insane demands, while the president and Democrats in Congress are bending over backward to be accommodating — offering plans that are all spending cuts and no taxes, plans that are far to the right of public opinion.
So what do most news reports say? They portray it as a situation in which both sides are equally partisan, equally intransigent — because news reports always do that. And we have influential pundits calling out for a new centrist party, a new centrist president, to get us away from the evils of partisanship.
The reality, of course, is that we already have a centrist president — actually a moderate conservative president. Once again, health reform — his only major change to government — was modeled on Republican plans, indeed plans coming from the Heritage Foundation. And everything else — including the wrongheaded emphasis on austerity in the face of high unemployment — is according to the conservative playbook.
What all this means is that there is no penalty for extremism; no way for most voters, who get their information on the fly rather than doing careful study of the issues, to understand what’s really going on.
You have to ask, what would it take for these news organizations and pundits to actually break with the convention that both sides are equally at fault? This is the clearest, starkest situation one can imagine short of civil war. If this won’t do it, nothing will.
And yes, I think this is a moral issue. The “both sides are at fault” people have to know better; if they refuse to say it, it’s out of some combination of fear and ego, of being unwilling to sacrifice their treasured pose of being above the fray.
It’s a terrible thing to watch, and our nation will pay the price.
{ 32 comments… read them below or add one }
Here is an example of the Cult That Is Destroying America by refusing to raise the debit limit.
“The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. … Increasing America’s debt weakens us domestically and internationally. Leadership means that “the buck stops here.” Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.”
Senator Obama March 20, 2006
Except that the debt that we have incurred was brought to us by George W. Bush and the Republican Congress that worshiped at his feet. Two tax cuts unpaid for; two wars unpaid for; and a trillion dollar prescription drug bill that’s also unpaid for account for the overwhelming majority of the debt and deficits that we face today. And don’t give me the utter BS that “Bush had only a $160 billion deficit in 2006” or whatever it was. That’s a complete and utter lie, as he refused to account for any of the bills from Iraq and Afghanistan in the budget. They were all funded through off book “supplemental appropriations,” and not actually put into the budget. Obama has actually put them in the budget, accounting for larger expenditures.
I’m not sure what the solution to this mess is but I’m pretty sure blaming Bush for it all is about as helpful as blaming the groundhog for long winters. As for wars well we could debate Iraq(which I’ve pledged myself to refrain from here) and I’d be shouting from the bottom of a deep hole and you could say you only like the half of Democrats that voted nay on the AUMF, but Afghanistan, get real- look up the house and senate roll calls on the AUMF on terrorists that preceeded the invasion: http://en.wikipedia.org/wiki/Authorization_for_Use_of_Military_Force_Against_Terrorists#Congressional_votes and tell anyone with a straight face that is anything but America’s foreign policy. 420-1 and 98-0!
Bush was a dullard and frankly so is anyone who really believes those were his policies. It’s an easy trap to fall into- if Bush is stupid and we’re smarter than him, so is anything he touched and we could have done better-we’ll pretend Bush stayed up late burning the midnight oil drafting plans to invade Iraq and ignore literally thousands of degreed professionals in middle east and other foreign policy studies who were really behind it. Are we going to spend a few decades shooting the country in the foot to prove he really was the worst President ever? He’s sitting at home in Texas and doesn’t care! He’s still going to have a Presidential library! (presumably with shelves full of “my pet goat” and “hunting safety with Uncle Dick”)
I can’t speak for RB but I think the point there is it’s disingenuous to not chock a lot of the rhetoric here up to silly partisan politics and we can carp about how it is we got to this point, but it’s GOT TO CHANGE. Not just the politicians, but their supporters selling the constant line of BS that “once our guy gets into office, everything’s going to be swell”. I didn’t buy it for a minute when I checked Obama’s box, knowing he was groomed by longtime Rockefeller/Trilateral Commission tool Zbigniew Brzezinski but I was more repulsed at the thought of McCain. Obama has underwhelmed as expected, worse his supporters are lulled into thinking all they have to do is repel the GOP in 2012 for success.
Do you really think that it’s EXTREME to demand the government BEGIN to reduce spending to less than revenues? Attack the GOP for its many faults, there are plenty- you couldn’t pay me to be a republican, I tried it one time. Who is wrong for being stubborn here, the GOP for demanding a debt ceiling? Or the other side for demanding the ability to continue spending more than they are taking in? Why has it taken so long to think like this at all?
The finances of this country are in dire straits, this impasse with threat of credit downgrade is not a warning, as if we just notice it that is all it’s going to be- it’s a milestone. We passed that marker, did we change up or did we just keep on going with the same foolish behaviour, like thinking blaming the other party would make it go away.
John,
You are my NEW hero! Seriously…your comment is dead on target and I could have not said it better myself…ya bastard! I hate it when someone is wittier than I am and makes more of an ingenious point than I do!
Ok…I’m over it.
Great job with how you structured your comments, the reasons behind them and putting everything in proper perspective.
Have a great weekend.
Best,
Laurence E. Gibbs
thank you- however I will sheepishly admit that every comment I ever post, ever, starts out with the intent of being one sentance. When I’m done and hit post, I’m not even sure how I got there. It’s vaguely similar to the way I fabricate things in a little workshop in my second bedroom, if I drew plans and made precise measurements the results are invariably a sloppy disaster. If I leave the digital calipers in the drawer and use at best a steel rule but mostly hold it to the light and think “okay drill here, bend there….” damned if I get it almost every time.
(fabricate as in-most long time OBceans remember the hearse I owned, parked on W Pt Loma- with the giant bubble roof- here is an album-
http://s353.photobucket.com/albums/r384/batvette/corvette%20IASCA/
It’s long gone but I still have the Corvette depicted in the top row- it may run again, who knows)
John, looks like you and I must get together on a completely different issue, one closer to home.
Sure, I think you have my e-mail address, if not post up again.
An Open Letter to Representative Brian Bilbray:
Vote to increase the debt limit. Vote in favor of ANY bill that increases the debt ceiling.
Your comment, “Raising the debt limit without a credible plan to end Washington’s wasteful spending will destroy jobs and make our debt problems even worse.” displays either your dishonesty or ignorance and I find it insulting that you don’t expect me to know that the debt limit has to do with meeting our current obligations. It is outrageous to think that after you already voted to spend the money now you don’t want to write the check unless some other condition is met. “Washington’s wasteful spending” sure wasn’t such a big problem when you voted in favor of spending all that money with no plan to pay for it. You want to know what will destroy jobs and make our debt problems even worse? NOT RAISING THE DEBT CEILING.
It scares me that this is not more of an issue for people. It’s not even a selection in the “Issue” list on your email web page. In an ideal world, I think, we would all be headed east with pitchforks and torches but most people don’t even know what the debt ceiling is. They expect that you know what it is and that when something has to be done with it that you will do what is best for them with it. Those that still have them are going about their day hoping for the best, unaware that the tiny amount that managed to survive in their 401(k) could be wiped out finally because you refuse to write the check for money you already spent. Not voting to increase the debt ceiling is not fiscal conservatism; it is stupidity and would hurt every one of those you have been elected to represent.
In the end, all the posturing and politics and hard-ball playing and pledges and bargaining and lines in the sand and even the strongly held beliefs and ideologies of the most well meaning, responsible, and respected who are sure they know exactly what this country needs at exactly this time in history and by God they are the exact right person to make it happen, none of it matters. This is not the issue to have the fight over. Not raising the debt ceiling would be disastrous to the economy and ruin millions of lives.
I am pleading with you to do the right thing, help us all and vote to increase the debt ceiling.
I am begging you to vote in the best interest of those of us who believed in you enough to pick you from all the others to send to Washington as our representative and vote in favor of any bill that increases the debt ceiling.
And if all else fails, I dare you to do the right thing and stand up and say, “This issue is too important to play politics with. Not raising the debt ceiling will hurt the economy and cause undue hardship on the people that I represent. Therefore, although I will fight with all my energy to reduce taxes and government spending, when congress as a whole approves a spending bill I will also fight to live up to that obligation which in this case means that I will vote in favor of increasing the debt ceiling without conditions because it is the right thing to do for the people of America.”
Or words to the effect.
I’m also as bewildered as Laurence and wonder what I have wrong about this:
The impasse we’re at is about a looming date where the credit rating will be downgraded if they cannot agree and pass the budget. GOP won’t budge unless enough cuts are made. The huge risk is not that a day came and went without a budget, it’s the credit rating downgrade is massively costly. Why the credit downgrade, is it because of that date? Not really. Is it because we can’t pass a budget? Again not really.
They are downgrading the rating because they have finally decided we cannot get our financial house in order. The date was given as a deadline for us to do so or face consequences.
Given the above facts assuming all are true, this is my assertion:
Republicans give in and pass the budget with a higher debt ceiling, only gets this years budget freed up, yet no guarantee we won’t still get a credit downgrade on that day or soon after, or face the same threat next year as we didn’t show we could get our house in order.
Everything in that last paragraph about obligation etc applies even more to his duty to endeavor to balance the budget, no?
Inviting corrections to any flaws in the above, I’m not deeply studied on this.
Jimmy J,
I agree with the message that you are sending to Rep. Bilbray and the logic behind holding our elected officials accountable, not only for their actions but for the job they are suppose to perform for us as their constituents.
I am just confused on why raising the debt ceiling is more of a benefit to us, “The People” then just it allowing more room for our elected idiots to dig our grave deeper.
I am not being a sarcastic smart-ass…I swear…I mean…I am no moron by any means…however…I am confused on this portion of the Economic spectrum.
If we raise the debt ceiling…does that not allow more room to just keep spending recklessly as those in our Government have been doing for far too long now? Is it not better to put the freaking breaks on finally and tell our elected dumb-assess to get their shit together and quit spending OUR money on their own pet projects like drunken idiots in some 3rd world whore-house?
I really do want you to elaborate, if you could, your reasons for wanting the debt ceiling raised and how it will benefit all of us for doing so.
I thank you for your time and look forward to your response.
Best,
Laurence E. Gibbs
The debt ceiling is not so much about “Washington’s wasteful spending” as Bilbray put it as it is about paying your bills.
Picture this: some otherwise unemployable moron has been elected to congress and has what he/she is convinced is the perfect way to solve The Worst Problem in America. He writes up a new law that says that from now on the government is going to always install the toilet paper with the leading edge hanging over the front of the roll and it’s only going to cost $1,000,002.49 to make sure it’s always done what is now deemed to be the correct way. Well, all the other morons in congress see this and think it’s the greatest idea they’ve ever seen and everybody wants so be a cosponsor and they all vote for it and hold hands and start singing Kumbaya and before you know it they’re all making out with eachother because they’re all just so pleased with themselves for solving The Worst Problem in America.
The next day, as they’re all trying to remember the name of whomever they’ve woken up with, some Washington insider is hired as Federal TP Inspector at a salary of $1,000,000/year and a badge is ordered down at BadgeHut for $2.49 and speeches are made memorializing the event and proclaiming a new age of enlightenment and reason in America and aren’t we all just delighted to have lived long enough to see it?
Eventually, the badge shows up along with a bill for $2.49 but guess what? In the week it has taken to make the badge, all the money has already been spent on all those other great ideas to solve all those other problems. If it was you or me, we’d just turn to one another and say, “Dude…”, and we’d take the cushions off the couch and find a few bucks to pay for the badge and maybe a pizza. But the government doesn’t have a couch. When they need money they have to actually go to banks and rich people and borrow it. It’s that borrowing, that debt, that eventually increases up to some maximum level allowed by law, the debt ceiling. It’s like the credit limit on a credit card.
So that’s a good thing, right? I mean, it keeps us from spending any more money that we don’t have so we can’t go even further into debt. The problem is that the guy from BadgeHut is standing there with a badge in his hand that we ordered. We didn’t say, “Make us a new badge but depending on how things go we may not pay for it.” He expects to be paid as promised for the new TP Inspector badge which he has made and delivered on good faith. Deciding now that we don’t want to borrow any more money to pay for the badge doesn’t actually do anything to reduce our overall liabilities. If we don’t pay now it doesn’t mean that we don’t still owe the money it just means that the next time we go to BadgeHut or anyone who hears from the guy at BadgeHut what a bunch of deadbeats we are, our credit’s not going to be any good.
The time to reduce spending isn’t when it’s time to pay the check it’s when you’re looking at the menu. If they’re all so fiscally responsible why have those idiots been ordering the lobster for the past 10 years?
Fiscal responsibility isn’t about not borrowing money to pay bills you’ve already incurred, it’s about only incurring bills that you can afford to pay and making your payments on time. That doesn’t mean you can’t borrow money, it means that you only borrow money you can pay back and if you’re running low because of whatever then you find a way to get more money and in the government’s case that means raising taxes which should have been part of the discussion on how we were going to solve The Worst Problem in America but it never is because it’s such a buzz kill. It’s just so much easier to talk about great ways to spend the money than it is to talk about where the money’s going to come from. Spending it fun! Making money is work. :(
We’d spend a lot more money if we talked about how we’re going to pay for things before we decide to buy them but once the decision has been made to buy them we have got to pay the bill on time as agreed no matter what. Not raising the debt ceiling would hurt our credit rating which would raise interest rates and hurt everyone.
Okay so I found this helpful.
It sheds some light upon where Jimmy J is coming from regarding the financial repercussions we’d be facing, which are certainly daunting- but it also tends to legitimize the actions of those who are standing fast.
Can you believe right now our federal government spends 45% more than it takes in in revenues?
The article discusses how republicans are using this as a bargaining chip to get the White House to cut spending. Why do they have to do this? I acknowledge we’ve had some major expenses carried over from Bush, but it’s been almost 3 years now and Obama has been Bush lite- I don’t see this as a partisan issue, even though the politicians are making it out to be. Our government is living far beyond its means, and while you are 100% correct they need to get this squared away before tuesday and raise the debt limit- it’s wrong to criticize anyone for putting their foot down to curb the status quo.
If they don’t, in about three days we’ll begin a calamitous sequence of events that will make 1929 look like a picnic.
First, a correction: In the last paragraph I meant to say we’d spend a lot LESS money if we talked more about how we’re going to pay for things before we decide to buy them, not MORE money.
Second, how can I put this… Anything that legitimizes the actions of those who are standing fast is, um, “misguided”.
Let’s say that the wackos decide to hold out because, damn it, they signed a pledge!, or some other stupid excuse, and our debt gets downgraded. So what? The existing bills are still going to have to be paid and we’re still going to have to borrow money to pay them except now we’re going to have to pay higher interest to borrow it.
Talk about saddling future generations with debt, this is exactly how to do it! Not just will it cost more to pay for things we’ve already agreed to pay for, in the future a higher percentage of every dollar spent will have to go to interest rather than to actually getting something done!
And the fact that we’re spending 45% more than is coming in is also a red herring. During a recession or depression revenues will be down so even if spending is held constant it will be a higher percentage of what comes in and government spending stimulates the economy during those times so that is exactly when it should be increased. It’s when times are good that we should have been spending less and paying more in taxes, not now.
I know it’s stylish now to say that the $700 billion stimulus should never have occurred but let’s think back to what was happening at the time. Unemployment was increasing, the stock market had crashed. We were on the brink of disaster. Fortunately there were enough adults in the room to do what needed to be done. It’s because of the stimulus we’re able to place and read these comments because we still have our electricity turned on. The stock market has almost doubled and unemployment is still high but the gripe is that it’s not decreasing fast enough, not that it’s increasing.
But again, it’s not about that. Raising the debt ceiling is about paying for what we’ve already bought and “those who are standing fast” are recklessly threatening your and my good credit to appeal to a bunch of ignorant fanatics for their own political purposes. If they really gave a damn and were able to understand what the hell is going on they would be fighting every spending bill that comes to the floor including those that spend money in their districts, they would be introducing legislation to eliminate current spending and raise taxes in a responsible way, and they would be fighting like hell to raise the debt ceiling because in the end THERE IS NOTHING MORE WASTEFUL AND EXPENSIVE THAN BAD CREDIT!
It seems to me they have been fighting spending bills, and Obama has been hinting at spending cuts to placate them, but has been vague and hasn’t followed through. That’s the take I’ve been getting on what’s been happening in the last few months prior to this, if anyone has more details chime in.
As for that bad credit thingy, this from USA Today:
Q: What will happen to the USA’s top-notch credit rating if the debt ceiling isn’t raised?
A: Rating agencies indicated they’re likely to lower their triple-A ratings on U.S. Treasuries by a notch if the debt limit isn’t increased — even if the government avoids default by paying bondholders. If the government defaults, a bigger downgrade is likely. Standard & Poor’s has gone further, saying it might drop the rating even if the ceiling is raised but Congress and the White House don’t agree on at least $4trillion in spending cuts over 10 years. But in congressional testimony Wednesday, S&P said a lesser amount of reductions could be acceptable.
Hmm…. isn’t that what the Republicans have been holding the debt ceiling hostage over, trying to get those cuts out of Obama? And S & P indicates they would downgrade without it?
Let’s be clear I can’t disagree with you about a calamity waiting on Tuesday, but I think it’s inaccurate to suggest the whole risk of this downgrade should be the fault of GOP legislators playing politics. Unless we want to call USAToday’s claim bogus, they knew that S&P and probably others were mulling this recently. Did the GOP trigger a possible downgrade that was only a creation of their standoff? It doesn’t look that way from S & P’s statement. It may be that they created a standoff to avoid a downgrade anyway.
See, this is exactly the problem: linking future spending to paying the bills we’ve already incurred. There shouldn’t be any debate over whether or not we’re going to pay what we already owe, we should just go borrow what we need. They already voted to spend the money now they’re threatening to not write the check. Putting any contingency on whether or not we’re going to meet our current obligations is exactly what makes us look like untrustworthy assholes who deserve to have their credit downgraded.
(As an aside I don’t want anyone to miss the irony of the threatened downgrade by the bond rating agencies like S&P. Remember these are the same clowns who gave excellent ratings to the mortgage backed securities that turned out to be garbage and got us into this whole financial nightmare to begin with, but I digress…)
I don’t really want to get into a debate about Republicans vs Democrats since it’s sort of a debate over whose turd smells worse. It shouldn’t matter what party they belong to, our representatives have been elected to serve THE PEOPLE not a political party. The constituents of the richest and poorest congressional districts in the country have very few interests in common so regardless of what party their representatives happen to belong to there should be very little correlation in their voting records. Unfortunately, since the Democrats and Republicans have taken over the political process, their party affiliation seems to be a higher determining factor of their correlation than anything else.
But again we’re talking about the debt ceiling and the fact that you can say, “the [insert one group here making them the bad guys] have been holding the debt ceiling hostage over, trying to get those cuts out of [insert another group here making them, not the good guys, just the other guys],” is the whole problem. The bad guys are bad because they are threatening to ruin our credit if they don’t get something and that’s stupid and reckless. In the article you cited, Ezra Klien in response to, “What happens if we stop paying the interest on our debt?”, says, “This is too scary to consider for any serious length of time. … the resulting financial crisis will be beyond anything we’ve ever seen in this country.” yet that is exactly what will happen if the debt ceiling is not increased.
If the Republicans want to spend less money then pass laws that spend less money but don’t pretend you’re saving money by not writing the check for money you’ve already spent.
S&P’s rating is an indication of the level of the risk of default on a security. Obviously the risk of default goes up as the debt increases but this is the first time that there has ever been a debate over whether or not we were going to unilaterally stop paying our bills because one group didn’t get what they want. It was simply inconceivable. “Holding the debt ceiling hostage” means that we may stop paying on a whim, not because we can’t pay just because we don’t fell like it and that’s real risk, risk that you can’t plan on. Until now you could look at the economy and see how things were doing and decide whether you thought things would get better or worse and make an investment based on that but now you’ve got to consider whether some crazy SOB is going to decide that his feelings have been hurt and he’s going to withhold payment because of that. How do you plan for that? How do you decide whether or not to make an investment with that kind of uncertainty?
You can say what you want about what we should spend in the future but when you start talking about not paying your bills because you’re not getting what you want somewhere else you’re a flake and your risk of default has just gone way up.
If these guys want to cut spending let them fight over spending bills when they should: before they’re passed!
ugh…. you forgot one thing, Obama and the Dems have not passed a budget for over 2 years. And the budget that Obama proposed, which didn’t receive a single vote, increased the debt by something like 10 trillion.
They thought they could ignore the spending problem and then force the debt increase by fear mongering about default and SS payments. WRONG.
Thank god for the Tea Party (who were elected for exactly this reason), luckily their broken clock is right twice a day, and we happen to be at that hour.
Ian- The 2011 budget was enacted on April 15, 2011, as Public Law 112-10. This budget will carry us through September 2011. If Obama and the Dems were unable to pass it, that means it got a majority of the Republican vote. The Republican are using the debt ceiling debate as a do-over of the budget they passed.
Hmm.. commendable use of actual factual data, I’m over at Politico.com searching the archives trying to make sense of it all, there’s a story on April 15 discussing Obama’s “budget deall from last week” yet there are also stories into late May describing both parties vetoing “Obama’s budget proposal”.
What ever the particulars 2 things I couldn’t ignore: I don’t think you could say Republicans ever wanted the budgets they were presented by Obama and voted on to pass, and even Democrats in both houses, while supporting Obama rhetorically, still called for more cuts than Obama was giving. The common theme all spring was Obama and D’s and R’s on the hill all spoke of the necessity for deep cuts- Yet when the numbers were revealed Obama’s math didn’t add up, many D’s side with the white house, about 1/5 side with R’s and warn of big trouble come summer.
I personally don’t pay much attention to Obama, having voted for him by default over the repulsive nature of McCain I figured he’d have a forgettable 4 years, and the whole “birther” thing was so silly I couldn’t side with that- but it does appear that on the whole economic thing our President may be the source of the majority of problems as we spiral into an abyss much larger and older than this impasse. He knows we must reign in spending, he speaks of reigning in spending in speeches, yet when the books came through he didn’t follow through even to the chagrin of some in his own party. The short version, I can’t see the GOP as quietly cooperative, much less willing participants of the budget tug of war through spring. I’m still poking around Politico to see who wants to cut what as this impasse is hardly the end of it. I’m going to start blasting Republicans if they are defending pet projects that enrich mega corps like Lockheed Martin an average of $40 billion a year, while gutting Medicare. Funding killing people while defunding people which kills them… then their most important issue will be right to life.
Oh the second thing I found at Politico, in the comments:
“The Obama reelection team has decided that Winning The Future (WTF) theme will soon be replaced by Rebuilding Our Failing Legacy, Making America Outstanding.”
Calling S & P “clowns” and Republicans “crazy” doesn’t address the issue that was raised- from S & P’s statement it’s pretty clear our rating was about to be downgraded due to our excessive debt, and the only thing that prevents it is Obama presenting a plan to cut spending.
So let’s go back two months and the GOP remained mum and we’re not talking about this now.
How is it we’re not being downgraded soon? S & P’s statement makes it pretty clear the impasse is not the issue, because the debt ceiling passing doesn’t prevent the downgrade. It looks like all this was about to happen whether or not they made a stink about it. Why are we dumping this all in the lap of crazy Republicans again?
It’s not Republican craziness that is motivating S & P. It’s the debt and excessive spending.
I didn’t call the Republicans crazy (it could be any crazy SOB) but I’m going to have to stick by my characterization of the guys who gave high ratings to bonds directly tied to a global economic meltdown as clowns.
It is impossible to read S&P’s July 14, 2011, Research Update, “United States of America ‘AAA/A-1+’ Ratings Placed On CreditWatch Negative On Rising Risk Of Policy Stalemate”, and think that the credit downgrade is due to “the debt and excessive spending.” The political climate is cited over and over again as the problem, not the level of debt and certainly not spending.
The Overview of the Research Update includes these tidbits:
“Today’s CreditWatch placement signals our view that, owing to the dynamics of the political debate on the debt ceiling, there is at least a one-in-two likelihood that we could lower the long-term rating on the U.S. within the next 90 days.”
“Since we revised the outlook on our ‘AAA’ long-term rating to negative from stable on April 18, 2011, the political debate about the U.S.’ fiscal stance and the related issue of the U.S. government debt ceiling has, in our view, only become more entangled. Despite months of negotiations, the two sides remain at odds on fundamental fiscal policy issues. Consequently, we believe there is an increasing risk of a substantial policy stalemate enduring beyond any near-term agreement to raise the debt ceiling.”
“We may also lower the long-term rating and affirm the short-term rating if we conclude that future adjustments to the debt ceiling are likely to be the subject of political maneuvering to the extent that questions persist about Congress’ and the Administration’s willingness and ability to timely honor the U.S.’ scheduled debt obligations.”
The Rationale section begins:
“The CreditWatch action reflects our view of two separate but related issues. The first issue is the continuing failure to raise the U.S. government debt ceiling so as to ensure that the government will be able to continue to make scheduled payments on its debt obligations. The second pertains to our current view of the likelihood that Congress and the Administration will agree upon a credible, medium-term fiscal consolidation plan in the foreseeable future.”
The actual level of debt, $14,294 billion, is only mentioned in passing and the word “spending” is only used once when they say, “Standard & Poor’s takes no position on the mix of spending and revenue measures that Congress and the Administration might agree on.”
I can’t imagine how but you must have misunderstood it because your comment that, “S & P’s statement makes it pretty clear the impasse is not the issue, because the debt ceiling passing doesn’t prevent the downgrade.” is pretty much the exact opposite of what they said.
#1 the paragraph I provided from the USA today article was all the article included from Standard and Poors. Any difference between what I provided and what you went out and found is not a product of my ignorance nor intent, I summarized the content as I saw it.
#2 I’m sure all of those agencies have issued a lot of statements about this matter, you provide what seems to support your position, I’m sure I could further do the same.
However I could easily argue my point merely on what you have offered in rebuttal:
“The second pertains to our current view of the likelihood that Congress and the Administration will agree upon a credible, medium-term fiscal consolidation plan in the foreseeable future.”
What do you interpret that as? Political bickering? Or get your finances in order? If they disagree that means the status quo of overspending continues. It HAS to mean that as it follows their point about the ceiling.
“Consequently, we believe there is an increasing risk of a substantial policy stalemate enduring beyond any near-term agreement to raise the debt ceiling.”
And thus they are saying the problem is far greater than merely an impasse on the ceiling.
#3 I’m not sure why you are elevating the statements of “clowns” to make your argument for you. :-)
You’re being silly on that one, of course they’re clowns. They still hold the big stick, you know what they say about gold rules….
#4 now getting serious it’s rather disappointing your whole focus in discussion is focusing blame for this impasse, and you seem to have no interest in what needs to get cut in the near future to prevent a repeat. See my reply to anna, I’m not here merely playing partisanship. You and I are just two posters in a blog and the public doesn’t vote on policies like wars or budgets, we just vote for leaders aligned with our ideals.
SO it would be needlessly insulting and inflammatory if I said “you’re part of the problem here” and I won’t.
If politicians in DC reflect the narrow scope of your concerns on this issue, they will ensure this event is repeated over and over and we will be ruined.
And so we would be if the GOP decides they could repeat this merely for politics each round.
#5 It’s my continued opinion it was more than just that- and that passing that deadline with an impasse will not happen, and was never their intent.
It is quite probable the GOP was not bluffing democrats and the white house to wake them up.
Odds are pretty good the GOP, Democrats, and The White House, were bluffing the American Public to get all of our financial houses in order for the rocky road we MUST go down soon.
They may sense we just need to drasticaly change but there is a worst case that’s always been looming.
Dollar crash. It’s even possible we may have to fight another war (besides 2003) to ease or delay it, I don’t see another victim in the cards but like the last one we may have a volunteer. If KSA or China flinch, hold on tight.
We’re all in denial, thinking “recovery”. I think “adjustment” is more accurate once bottom becomes clear.
Greetings Gang!
Incredible debate and information being shared by both Jimmy and John…thanks Gentlemen for really keeping up on this and bringing it to light for all of us to take in.
I can see that we are all universally in agreement that BOTH parties are in the business of eluding, misguiding and totally evading of the true issues all whilst making sure the confusion ensues in order to keep their paychecks flowing.
Now, it seems that there is true fear because they have dug caverns that have run so deep that they have lost the light from the surface that can guide them back to their safe havens.
While they and the (and I love this term), lame-stream media keeps feeding us shit and telling us it’s pudding, keeping most of our fellow voters in check, the rest of us truly get the fact that the answer is simple: Cut out the Pork, streamline what is truly needed to keep the infrastructure not only running but prospering. Like any house hold…you have a certain amount income coming in and a certain amount of core bills that MUST be paid in order to survive and make sure you have a roof over your head, groceries in the fridge and some savings in the bank. Once you have covered the basics, if you have anything left over, you save a little bit more and then take the rest to reinvest in your house to clean it up, improve it and make sure that it is in great shape for when your children grow up and need a place for their families to live, grow and prosper.
No bad for a guy who never received a degree…unlike the “geniuses’” who went to prestigious universities that are now in charge.
Here is what we need in order to make our country great again:
Less Government Involvement – Just infrastructure (Highways, National Security, Checks & Balances to State Governments to insure Individual Freedoms and Fair Treatment of All, National Growths in Environmental Protections, Sciences and Defense…add more if I missed what should be governed Nationally instead by each individual State).
More State responsibility in making sure education, freeways, roadways, law-enforcement (prisons are secured and criminals are being punished), fire & emergency services, revisualizations in our communities for self-sufficient growth and prosperity, cleaner water and overall environmental protections is fully funded and supported including making sure we build a surplus in our budgets before, they (the State Legislature) spends on anything that does NOT benefit us, the voters.
Thanks again to Jimmy and John for the incredible information.
Again, I may be wrong with my input, my ramblings and my insights…but then again…that’s “This Jews Point of View”.
And I forgot one very important thing…
A flat rate tax on goods and services in place of the current tax system we have that taxes the hell out of our hard earned, depreciated dollar.
We all need to buy food, clothing, furniture, PS3’s and so on and so forth…
So…if we can have a fair, flat (goods & services) tax…that does not break our assess…EVERYTHING that provides for a STRONG & PROSPEROUS Country, including our States (which I mentioned above) can and will be paid for.
Sorry for the break up of thoughts.
Raising the debt limit without addressing the rapidly increasing $14 trillion debt will not avoid a future debt downgrade, IMO.
Who would have thought our credit rating would have been downgraded after this debt deal with no real cuts.?
No real cuts? That is rich. How about no revenue in sight?
In response to a number of posts above, it’s illuminating to point out that the debt ceiling, which was established during the civil war, has been passed on a simple up or down vote, regardless of the dominant political party. Obama asked for a straight up or down vote, reminding us that the debt ceiling is established to make good on legislation that has already been passed. Passing the debt ceiling is not the same thing as passing the budget. We passed a budget, and now we have to raise the debt ceiling to pay for the budget. This is not a budget do-over.
Playing chicken with the debt ceiling is not the same as responsibly debating a budget. Our credit rating is not a function of a rating agency’s analysis of our budget choices. If that were the case, what rating agency in its right mind would confer a AAA rating on a country that doesn’t count wars, a medicare prescription drug benefit and tax cuts in its budget, as if the tooth fairy were going to make up the difference?
Our commitment to make good on our budget expenditures is critical to Wall Street. The Republican’s are consciously creating chaos. It appears that Wall Street doesn’t like political chaos. The conjecture that even if we do raise the debt ceiling, the markets and rating agencies will assign us a debt downgrade in the future is a lot like yelling fire in a room where there is no fire. The motives for doing so are highly suspect and the results are dangerous.
I don’t share the sentiment that it’s creating chaos to stand fast weeks ago and say “Okay, our irresponsible behaviour ends and ends now”, while the opposition wants the ability to preserve a status quo of spending more than they take in.
Now a partisan point I’d like to see clarified is it’s been implied the Republicans are demanding we meet this ceiling by cutting vital entitlements for the needy like SS checks and medicare. Democrats supposedly claim they won’t allow that and accuse the GOP of not allowing cuts to defense spending and defense contracts and funding wars.
Where does the truth lie there?
I don’t think we can cut operating costs in ongoing conflicts, not with men on the ground, but the Defense budget was extremely bloated around 2 years ago when I was looking at the numbers. Is the GOP standing on expensive weapons procurement while demanding the elderly and poor take a hit? Has either party been caught hiding pork barrel waste like pet local projects for senior lawmakers’ constituants? (the stuff that really enrages me!)
Wrong, wrong, wrong…..we have not been passing budgets. The last Obama budget was defeated 97-0 in the Senate. Every republican, democrat and independent voted against this budget that had no spending cuts.
http://thehill.com/homenews/senate/163347-senate-votes-unanimously-against-obama-budget
I will say it once again. I understand finance. I understand bond ratings.
Raising the debt limit without addressing the rapidly increasing $14 trillion debt will not avoid a future debt downgrade. I would never yell fire…. but I would yell buy gold.
RB- knock yourself out. Buy gold.
It’s like ordering one of those totally bitchen t-shirts ,you know, the ones with the real local style OB on the back, and not having the money in your checking account to cover the 20 bucks or what the f34kever.You get an over draft fee tacked on,$26 or whatever. It would have been cheaper to hock your watch in the first place to get the shirt you spent 40 years seeking. They are gonna get the money one way or another.
LOL about your T-shirt example – funny funny.
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