August 8, 2011

Second downgrade coming?

Looks like it:

The credit rating agency’s managing director, John Chambers, tells ABC’s “This Week” that if the fiscal position of the U.S. deteriorates further, or if political gridlock tightens even more, a further downgrade is possible.

Chambers also said Sunday that it would take “stabilization and eventual decline” of the federal debt as a share of the economy as well as more consensus in Washington for the U.S. to win back a top rating.”

For all those — both left and (establishment) right — inclined to excuse their own complicity and try to scapegoat the TEA Party, which remains the one faction who actively pushed for serious, actual debt reduction and a return to fiscal sanity, take note here: we recognize that it’s been your strategy since the downgrade to seize on the warnings against “political gridlock” in order to insist that a failure to “compromise” on the part of the TEA Party supporters is what led to the downgrade. We also recognize the dishonesty and cynicism of such a strategy: as has been noted time and again, Cut Cap and Balance was the compromise, with the vast majority of TEA Party supporters in the House voting for the bill, which gave the President his debt ceiling increase in exchange for both real cuts and a mechanism by which to control future deficit spending and debt.

Who didn’t compromise — and whose political intransigence is at the heart of the downgrade — is the Democrats, who refused to come up with their own plan, and who then refused to even allow CC&B come up for a vote. This faction — along with the go along/get along GOP establishment — is now looking to pass blame for their own willingness to block compromise onto the TEA Party.

It won’t work. 66% of the population backed CC&B; 75% backed a Balanced Budget Amendment. What they got instead was more spending (the single largest increase in history) for more empty promises of future cuts in the rate of spending.

This didn’t come anywhere near to what the credit agencies demanded, and it is not lost on us, no matter how feverishly you wish to spin it, that what is missing from any plan but those pushed by the TEA Party is any “‘stabilization and eventual decline’ of the federal debt as a share of the economy,” something that simply won’t happen without real cuts. Raising taxes on “millionaires and billionaires,” even were you to confiscate all their wealth by taxing them at 100%, would run this government for less than a year. And once you confiscated it all, you’d have to then look elsewehere for new “revenues” to keep the government running.

— Which should suggest to any sane person that perhaps the problem is the size and greed of government itself, and not that some people — though that number continues to shrink, as the economy has contracted since 2007 — continue to make money in the private sector.

The easiest way to do away with “tax loopholes” for “corporate jet owners” and those with yachts is to reform the tax code entirely. And if the President were really serious about “fairness” and “shared sacrifice,” he could easily call for a flat tax — a way to ensure that everyone had “skin in the game,” and that everyone was paying “their fair share.”

But that’s not what the President and the Democrats want. Instead, they want to make our tax burden even more “progressive” than it already is by further taxing those who already pay 70% of the income taxes.

In a country where now 51% don’t pay federal income tax — and many of those even receive tax rebates for taxes they never paid — it is galling to think that putting more of the burden on those already paying for nearly the entirety of the country’s tax burden is what passes for “sharing” and “fairness.”

But then, this is a government that defines a statistically insignificant slowdown in their profligate spending as a spending “cut,” and views the absence of money it never had as an “expenditure” that counts against its books. So we should hardly be surprised that it would redefine “sharing” and “fairness” to indulge its own cupidity.

I’ve been preaching since this blog began that the fight is and always will be, at base, about language. I’ve been told by people on my own side that such a position is “fundamentally unserious,” or that the status quo with respect to linguistic assumptions is what works best — inasmuch as it has the capacity to forge truths out of nothing more than consensus, which can be used to help “our side” as well — and so must be vehemently defended.

But that fact remains, that while we continue to play in the left’s linguistic sandbox, they will always control the long-term narrative. That many establicans on the right seem content to exist in just such a world leads me to believe that they themselves are happy with the consequent divide between the ruling class and its subjects that is the natural and inevitable product of just such epistemic framings.

Party no longer matters. It is the ruling class vs. the people they are ostensible “representing.” And we can’t defeat them until we take away their weapons — not the least of which is the power to define and frame the debate in language altered to suit their needs.

(h/t geoffb)

Posted by Jeff G. @ 8:58am

Comments (11)

  1. But I heard Timmy Geithner on TV saying that S&P was stupid and didn’t understand gov’t budget practices [hell, who does?] and that this was all a silly misunderstanding!

  2. Who could have predicted that gold would be over $1700 an ounce and rising?

    The cynic in me says that key members of the Obama administration have favorable positions on gold.

  3. And here comes the next round of downgrades. From S&P:

    Standard & Poor’s Ratings Services said today that it lowered its issuer credit ratings and related issue ratings on 10 of 12 Federal Home Loan Banks (FHLBs) and the senior debt issued by the FHLB System to ‘AA+’ from ‘AAA’. We have also lowered the ratings on the senior debt issued by the Federal Farm Credit Banks to ‘AA+’ from ‘AAA’. The ratings on the individual farm member banks are not affected.

    In addition, we have lowered the senior issue ratings on Fannie Mae and Freddie Mac to ‘AA+’ from ‘AAA’. Our ‘A’ subordinated debt rating and our ‘C’ rating on the preferred stock of these entities remain unchanged


  4. Tim Geithner also argued over the weekend that the Tea Party wanted default or the destruction of the full faith and credit of the United States. I saw tape of this only this morning. Tim Geithner is of course a lying liar who lies, but you knew that long ago. I suppose he believes lying like this does some sort of credit to himself. But if he believes that, he is sorely mistaken.

  5. if I have my calculations right a second downgrade would mean that Obama had increased America’s downgradings 100%! And it’s just his first term!

    Hope and change never tasted so delicious but at some point you have to worry people are going to start expecting this kind of performance to continue on and on. It’s better to underpromise and overdeliver.

  6. Good to see you swinging for the bleachers, JG. You were right.

    And if I’m not cartooned as a shameless sycophant, I could even be on to something here.

  7. Heh. Fannie and Freddie get theirs, years too late.

    A reminder of what was ‘The Smoking Gun‘.

  8. Still, be careful what you name your dog, else you could find yourself in big trouble, oh boy! /sarc

  9. …we recognize that it’s been your strategy since the downgrade to seize on the warnings against “political gridlock” in order to insist that a failure to “compromise” on the part of the TEA Party supporters is what led to the downgrade.

    Given that S&P have made it clear that reductions in debt & deficit are the drivers here, I think it’s important that we push back loudly against the charge that this is all due to our recalcitrance in the debt spending debate.

    If everyone agreed, without any acrimony at all, to continue deficit spending per the current plan, the downgrade would still come; one could argue it’d be even worse. If anyone wants to complain about a lack of compromise, they need to get smacked on the face with the truth that the only compromise that matters is one that actually reduces the nation’s debt.

  10. Horsedragging.

  11. Pingback: The Tea Party downgrade | FavStocks