Michele Bachman and her ilk have simply lost their ever lovin’ minds…
ATLANTIC, Iowa — It filled up early at the Cass County community center here. Five minutes before she was scheduled to speak, better than 50 Iowans had shown up — the lucky ones under a tent, the unlucky ones in the warming sun. (They were told to show at 11:45.) The worry of the moment was, what else, the S&P downgrade.
“I agree with S&P,” said Morry Knudsen, 76, a retired college professor. “This debt thing they passed… it was a facade.”
When Bachmann arrived, she devoted half of her opening statement to the downgrade. The message: She could have stopped it.
“For the last two weeks, I led the fight against raising the debt limit,” Bachmann said. Increasing the limit “pushed the rating agency over the edge.” It was a “$2.4 trillion blank check that caused the downgrade.”
Make no mistake: The downgrade was Barack Obama’s fault. “We were somehow able to get through the Great Depression without a credit downgrade,” she said. “Only under this president have we seen a credit downgrade… we are getting that credit rating back. That is going to be our goal. That will be our mission.”
I suppose we have the Tea Party Caucus in Congress to thank for this development. Of course they’ll deny they did anything to cause this downgrade, but hell, they deny climate change, evolution, parts of The Constitution, slavery, etc. so we already know how they will spin this as all Obama’s fault…
As threatened, the ratings agency Standard & Poors has downgraded the country’s AAA bond rating, despite acknowledging, according to multiple reports, that their initial calculations included a $2 trillion error projecting U.S.’s debt-to-GDP ratio over time.
You can read the entire explanation below the fold. But the key is that the use of the debt limit as a legislative bargaining chip, combined with gridlock in Congress, led S&P to publicly conclude that the country will have a hard time restoring gravity to its debt trajectory.
However, while they parcel blame across Congress — implying Democrats are rigidly opposed to cutting entitlement spending — they hint that Republican intransigence to raising tax revenues is more troubling.
From the agency’s press release:
“We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process,” reads a statement from S&P. “We also believe that the fiscal consolidation plan that Congress and the Administration agreed to this week falls short of the amount that we believe is necessary to stabilize the general government debt burden by the middle of the decade.”
“No one is as deaf as the man who will not listen.” ~ Jewish Proverb
House Republicans were cautioned Thursday in a closed door meeting with credit rating agency officials that a “death spiral” in the bond market was one of the possible outcomes in the event of default.
One official warned of a worst-case scenario in which a default on the nation’s credit could result in a rapid drop in bond values, sparking chaos in the markets — a dramatic warning asWashington worked on a possible deal on deficit reduction and an increase in the debt limit.
Members who attended the meeting later countered that the tone of the discussion was not nearly as apocalyptic as the phrase initially made it sound. According to sources inside the room, the “death spiral” term was also used in reference to the collapse of Lehmann Brothers in September 2008 as a historical example.
Rep. Nan Hayworth, a freshman Republican from New York, hosted this off-the-record meeting with GOP House lawmakers Thursday afternoon. Hayworth called the meeting a “dispassionate and objective” discussion about the potentially disastrous consequences of not raising the debt ceiling by the August deadline. But Republicans said they were also told that unless the government undertook a serious deficit reduction program, the credit ratings could still assign a negative outlook to the nation’s debt anyway.
“If we do nothing, if we simply raise the debt ceiling, without a change in America’s spending trajectory then the markets will react negatively as well. That’s certainly the message I took away,” said Rep. Mike Pompeo (R-Kan.).