The debt rating of the United States of America was downgraded one notch from AAA to AA+ for the first time in our nations history late last Friday, after the financial markets had closed, by Standard & Poors, one of the three main bond rating agencies in the world. In their report, S & P suggested that the US may suffer a further downgrade within the next 6 to 24 months, if things don’t improve.
The other two rating agencies, Moodys and Fitch, still have US debt under review for a possible downgrade, but have yet to taken any action.
FOXNews.com reported that the S & P report stated … “political gridlock has kept the US from reaching a plausible solution for getting it financial house in order. It remarked that the agreement last week to reduce the nation’s debt by $2.1 trillion over 10 years ‘fell well short’ of comprehensive reforms that some had advocated.”, a sentiment we provided in our article posted last Wednesday.
What was the White House and Democrat’s instinctive response to all of this?
Blame S & P, the Tea Party movement … and even 2012 Presidential candidate Mitt Romney.
Carol E. Lee, in her “The Washington Wire” article today, “Axelrod Hits Romney, Calling HIs Reaction to S & P Downgrade Pathetic”, included this quote from Romney, “America’s creditworthiness just became the latest casualty in President Obama’s failed record of leadership on the economy. Standard & Poors’ rating downgrade is a deeply troubling indicator of our country’s decline under President Obama.”
Axelrod’s response: “Having ducked and dodged and dithered throughtout the debt-ceiling debate (actually a better description of Obama’s behavior), and then dropping in on the final day and opposing the compromise, it’s pathetic that Mitt Romney was the first out of the gate with a press release blaming the President after S & P issued its report.”
This is classic Democrat obfuscation, meaning “don’t cloud the issue with the facts”.
If this is Mr. Axelrod’s best shot, I recommend the Obama campaign not waste $1 billion in his bid for re-election.
From another chapter in the Classic Liberal Handbook “Shoot, Malign and Intimidate the Messenger”, a report this morning by John Harwood of CNBC, an [unamed] White House staffer was quoted as saying … “the White House believes that it is ‘Amateur Hour’ over at Standard & Poors, and doesn’t believe the downgrade will matter.”
Huffington Post-“Tim Geitner Blasts S & P for Downgrade”-not really worth reading.
As of this moment, Standard & Poors has downgraded the debt of Fannie Mae, Freddie Mac and some 32 other federal financing agencies of the United States-a domino affect from the initial downgrade, which will now quickly begin to affect municipalities bond issues.
It seems as though, once again, the White House read on an important situation was totally wrong.
From the “Just Make Stuff Up-Our Media Will Not Question It” chapter of their handbook, Ezra Klein (no relation to this author) of The Washington Post, was interviewed on “The Last Word with Lawrence O’Donnell” this morning, wherein he stated that ‘he was told Standard & Poors was going to specify that it was the fault of Republicans in the debt-ceiling process for not allowing any tax increases.’
Standard & Poors did not communicate any such ‘clarification’, and In fact, their clarification in a FOXNews.com article from yesterday, titled “S & P Chief Looks at Entitlement Reform to Resolve Debt Downgrade”, during his interview with Chris Wallace on “Fox News Sunday”, David Beers, global head of sovereign and international public ratings at S & P was quoted as saying … “The key thing is, yes, entitlement reform is important because entitlements are the biggest component of spending, and the part of spending where the cost pressures are the greatest.” In a prior comment he stated … “spending on entitlements persistently drags US debt further into the red.”
Additionally, in the article it said S & P “blamed the political gridlock has prevented the U.S. from reaching a plausible solution to getting its financial house in order”, and that the debt-ceiling deal cut the week before “fell well short” of the ‘comprehensive reforms that some had advocated’, such as those from the International Monetary Fund (IMF), which were broken down and defined in our article posted last Wednesday.
The same article quoted John Chambers, Managing Director of S & P, when he appeared Sunday on ABC’s “This Week” as stating that Obama’s fiscal commission had “plenty of sensible recommendations”, which he said were ignored.
President Obama, our “Obstacle-in-Chief”, threatened repeatedly to veto any bill that “touched” entitlements.
Harry Reid (D-NV) Senate Majority Leader “tabled”, without any consideration, both the Ryan Plan and more recently the Cut, Cap and Balance Plan, either of which would have satisified the requirements of S & P and IMF, preventing either bill from even being debated on the Senate floor.
Do these two actions seem more like the components of “gridlock”?
Finally, in their last ditch effort, Democrat leaders hit the Sunday news shows, armed with “canned” terminology “hot” off the Democrat Caucus email blast, and with amazing synchonicity, they all parroted … “This is really the ‘Tea Party Downgrade‘”!
Senator John Kerry (D-MA) said the Tea Party movement held the U.S. economy “hostage” and “ransomed it” for a better debt-ceiling deal.
Senator Tom Harkin (D-IA) said [Dems] were forced to “appease the hostage-takers”, and that “most Americas have no use for the Tea Party ‘extremists'”.
Howard Dean, former Democrat Presidential candidate and now head of the Democratic National Committee (second highest ranking Democrat Party member behind Barak Obama), said in a quote captured by FOXNews.com today … “I think they [Tea Party Movement] are totally unreasonable and doctrinaire and not founded in reality. I think they’ve been smoking some of that tea, not just drinking it.”
Did these people sound reasonable?
Here are the facts.
The U.S. financial markets began “voicing” their opinion of this President and Congress, and the totally inadequate debt deal that came out of it, by plunging over 1,100 points over a nearly solid 10-day drop, losing 8% in market value.
Standard & Poors memorialized the market sentiment with their own downgrade of U.S. debt-pointing the “finger of blame” directly at lack of “entitlement reform” as the culprit.
The world financial markets then collapsed overnight, trimming 2% to 4% of market value off world assets.
The final vindication came today, as the Dow fell by nearly 635 points, slashing 5.5% of market value, followed again by the S & P 500 and NASDAQ markets.
To repeat, the Republican controlled House of Representatives formulated both the Ryan Plan and the Cut, Cap and Balance Plan, very substantial strategic financial plans for the U.S., either of which S & P has indicated would have averted a downgrade and this worldwide meltdown.
But, Senate Majority Leader Harry Reid (D-NV) locked them both in a dark safe in Senate Chambers, proudly proclaiming to the entire world that they were “Dead on Arrival” and “Dead, Done, Over”.
As one well trained in economics, I can report that history has consistently proven that the “will” of the [capitalist] “Market” always prevails in the end. And after this worldwide catastrophe, it is clear that the market “hates” the Democrat’s strategy and tactics. So, I rightfullly expect that in quid qo pro fashion, “Dead, Done, Over” is the [euphemistic] fate that awaits President Obama and Democrat Party in the November 2012 elections.
The world can’t afford it anymore, and neither can our children.