Monday, August 8, 2011

Standard & Poor's Downgrades US Credit Rating — Who’s At Fault? Collection Of Quotes From Republican Politicians We Should Not Forget!

Guest post by EbbtideMB

There are plenty of fingers pointing in all directions following Friday’s Standard and Poor’s downgrading the US credit rating from AAA to AA+. Economist Robert Reich even questions S&P’s rationale, and points to the fact that S&P actually had no business basing its downgrade on its view of how politics should be conducted.

While neither Democrats nor Republicans went into or came out of the debt ceiling debacle with their haloes totally intact, and there is dissatisfaction with the ultimate deal from both sides, I hope this won’t be another instance of the media, as usual, presenting a case of false equivalency.

Even the Standard & Poor's report (click to download) itself states:

“The political brinksmanship of recent months highlights what we see as America’s governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy. Despite this year’s wide-ranging debate, in our view, the differences between political parties have proven to be extraordinarily difficult to bridge, and, as we see it, the resulting agreement fell well short of the comprehensive fiscal consolidation program that some proponents had envisaged until quite recently.”

And remember, John Boehner said, “When you look at this final agreement that we came to with the White House, I got 98 percent of what I wanted. I’m pretty happy.”


Keep these and the following quotes handy.

When the subject comes up, and it will, as to who was on the wrong side of the debate, who was intransigent, who was willing to drive the economy off the cliff, perhaps the following quotes will help to make the case that the Right was WRONG.


OUR KEEPERS - memorable quotes by Republican politicians from the recent days:

Appearing on Fox News to discuss Republicans’ opposition to raising the debt ceiling, House Republican Conference Chairman Jeb Hensarling (R-TX) said it is “contrary to our DNA” to raise the debt ceiling.

House Speaker John Bohener (R-OH) admitted that some members of his own caucus who are refusing to agree to a compromise debt ceiling deal are hoping to unleash “chaos” and thus force the White House and Senate Democrats to make bigger concessions than they’re already offering.

Exact quote:

BOEHNER: Well, first they want more. And my goodness, I want more too. And secondly, a lot of them believe that if we get past August the second and we have enough chaos, we could force the Senate and the White House to accept a balanced budget amendment. I’m not sure that that — I don’t think that that strategy works. Because I think the closer we get to August the second, frankly, the less leverage we have vis a vis our colleagues in the Senate and the White House.


“By defaulting on the debt, in the short and long term, it could benefit us to go through a period of crisis that forces politicians to make decisions” on major policies that affect the budget.

KEYES: Do you think though if we avert this August 2nd deadline by passing an increase in the debt ceiling, we’re missing an opportunity to perhaps teach a lesson like you’ve been talking about?

PAUL: No, I think if you didn’t raise it, people say it would be the end of the whole system, but maybe people will say, “hey, maybe they’re serious!” And maybe it would be a positive. That’s what we should do because if we continue to do this, we’ll destroy the dollar.

KEYES: It could be a positive thing though?

PAUL: I think it’s possible, but it’s not predictable.


Well to not raise the debt ceiling could be a default of the United States on bond and treasury obligations. That would be very bad for the position of the United States in the world at large but this is an opportunity to make sure that government is changing its spending ways.


Presidential hopeful Tim Pawlenty thought that America needed a "dramatic moment":

TPM asked Pawlenty whether Republicans should raise the debt ceiling if their only two options are default or a deal that includes higher taxes. He replied that the party cannot and will not offer any concessions on revenue and that America may need a "dramatic moment" to effect the "quantum change" the country needs.

Senator Mike Lee (R-UT) explained to Fox News that he would vote "NO" in any case, even if there was a default:

Lee tells Fox and Friends, “I’ll be voting ‘no’ because this is a permanent problem when we take on two and a half trillion dollars of new debt. That’s a long-term commitment that’s gonna take us decades to pay off.“ Lee explains that the United States doesn’t have a balanced budget amendment, and therefore “we have no business to raise to debt limit.”

When asked what he would do if he knew he was the last vote to determine if this country goes into default, Lee says he would still vote no.


Another presidential hopeful, Michelle Bachmann, apparently finds higher unemployment numbers very attractive:

In an interview with CNBC this morning, Bachmann was asked if her poll numbers might improve as the unemployment rate went up.

"Well, that could be. Again, I hope so."


Senator Jim DeMint (R-SC) was willing to cause "serious disruptions" in the economy to secure significant cuts and a balanced budget:

DEMINT: The reason the president hasn’t addressed the issue even though we knew it was facing us, and this is the fourth time he’s asked for an increase in the debt limit, he has been burning time — that’s what [Vice President Joe] Biden was supposed to do is get the Republicans behind closed doors — is burn the clock up until we have a crisis. So now we’re at the point where there would have to be some serious disruptions in order not to raise it. I’m willing to do that, I just don’t think we can find enough of Republicans and Democrats to say it’s time to stop spending.


Senate Minority Leader Mitch McConnell (R-KY) believed that the default issue would make a great "hostage":

I think some of our members may have thought the default issue was a hostage you might take a chance at shooting. Most of us didn't think that. What we did learn is this -- it's a hostage that's worth ransoming. And it focuses the Congress on something that must be done.

Rep. Darrell Issa (R-CA), chairman of the House Oversight Committee, claimed on Southern California Public Radio that Aug. 2 was an “artificial deadline” Obama was using to “extort a deal” out of Congress:

“We should not be having a discussion with a artificial deadline of August 2nd, set by the President so the President can extort a deal through his reelection period. That’s not right, it’s not what the American people expect us to do.”

Listen to Rep. Issa HERE.

Finally - the worst quote of all? Rep. Todd Rokita (R-IN) has no concerns about the economy whatsover, and those who do are apparently "piggish" and "un-American."

Today on ABC’s Top Line, Rep. Todd Rokita (R-IN) went one step further and threw away the word “default” altogether. While he views Aug. 2 as an “important date,” he refuses to “take the premise that we’re going to default on our obligations.” Believing “default” isn’t even the right word to use to describe the economic consequences, Rokita slammed those who would avoid default as “piggish” and “un-American” for worrying about “my own little program or my own little economy.” Rokita then declared defiantly that he’s willing to vote down a debt ceiling raise even if it means “the economy might get worse.”


Also: Is there some sanity on the Right?

Yes, there were a few voices of reason on the right, which mainly served to demonstrate how insane the rest of the wing was behaving.

Former Sen. George Voinovich (R-OH) teed off on House Republicans’ brinkmanship on the debt ceiling, saying intransigent GOP congressmen are willing to risk destroying the county’s economy to get what they want. Voinovich told Rolling Stone’s Tim Dickinson:

“They’re playing Russian roulette and all the chambers have a bullet.” [...] “They’re flamethrowers. ‘We’re going to get what we want or the country can go to hell.’”

Note: One wonders if Voinovich would have been as outspoken had he not been a FORMER senator.

And regarding the Balanced Budget Amendment noise - report from Think Progress:

Bill Hoagland, a budget adviser to Republican leaders from 1982 to 2007, called the amendment “a political cheap shot,” while Scott Galupo, a former staffer for Boeher, has called the idea “quite simply, insane.”

Bruce Bartlett, a former economic adviser for Presidents Ronald Reagan and George H.W. Bush, noted that the amendment is a phony solution to the budget mess that allows Republicans to support a balanced budget while not having to “support anything politically unpopular.” Indeed, as the Republicans quoted above make clear, they really have no idea how they’d balance the budget; they just want it to magically balance itself.

Editing by Patrick.


Note by Patrick:

Many thanks to our reader EbbtideMB for this valuable contribution!

Finally, I would like to draw the attention to the utterings of one of our favourite subjects, Sarah Palin, who was interviewed by Sean Hannity on Fox News about the debt ceilings issue on July 13, 2011 and who in this interview presented a rather confusing mash-up of her usual suitable-for-all-occasions talking points - excerpts:

It's absolutely nonsensical, the lack of planning that our leaders are exercising and showing their constituents coming out of D.C. right now, and the lack of understanding that too many have there in D.C., not understanding that Obama's big government, job-killing policies really are the antithesis of what our country needs to get back on the right track to allow us to be exceptional again.

Remember, our country was built on a strong foundation of reward for work ethic and development of our natural resources. And here we've gone in the complete opposite direction under Obama with both those cornerstones. And we are where we are now with, as you mentioned in your intro, Moody's telling us that our AAA rating is under review now because we don't have a plan to get us back on that solid footing.
This is the time to reload. And we reload with reality by giving facts and numbers to the American public so that those of us across the U.S. can start chiming in and letting our representatives know that we will not capitulate, we will not hand over more power, which I believe is unconstitutional, to President Obama to further manipulate our economy.
You prioritize. Our president essentially suggested the other day that he's not able to prioritize. As the chief executive of our nation, he cannot prioritize, and that's why he suggested that Social Security checks may not be written come August 2nd if that debt ceiling isn't increased.
But see, Sean, there are departments that can be revamped and -- and some bills that can wait. And, again, it's our president's job, as the leader of the executive branch, to prioritize and administer those dollars that Congress has allocated. And our president obviously isn't capable of doing that, because he has no plan that he can even put forward to say here are my priorities.

Instead, he -- as he did some months ago when he said that government would shut down if X, Y and Z weren't accomplished, the military wouldn't get paid, they'd be thrown under the bus. And then he says the other day, oh, this next go around, it's going to be our seniors who get thrown under the bus.
It's -- if I were in Congress, I would not vote to incur more debt, not under this president. I -- I do not trust him.

However, as I've gone on record saying previously, I believe that it will be increased, because too many in Congress believe that the -- the president must have that allowance of increasing the debt.

So, having said that, what I would accept, knowing that it's going to be increased anyway, is DeMint's plan to cut the cap and to balance our budget. We do that in our state governments. We do that in our city governments. It's time that the feds do that, too.
But again, as I say, I don't trust this president to not only not -- he doesn't know how to make those cuts, he's never had to do this before. He's always been one to just spend other people's money, even if that money is just borrowed money or printed out of thin air. He's never had to exercise real executive authority like that.

It's pretty hard to decipher what she actually wants to express, apart from not "trusting" President Obama, but in another installment of "the-media-doing-its-job" the Washington Post performed an extensive fact-check of Sarah Palin's comments in this interview and also explained some essentials of the debt ceiling issue, which Sarah Palin was apparently not aware of:

Potential presidential candidate Sarah Palin popped up on the Sean Hannity Show on Wednesday night, making a series of somewhat contradictory statements about the battle over the national debt ceiling.

“If I were in Congress, I would not vote to incur more debt,” she asserted. But she also said, “We cannot default.” But then she also said: “We cannot afford to retreat right now.”

Eventually, she got around to making the point above, saying the president simply has to prioritize what bills he is going to pay, “revamp” some departments and so forth. She made it sound all so very easy.

As we have written, there is substantial debate over what the Obama administration can or cannot do once the putative Aug. 2 deadline is reached, especially regarding the disbursement of Social Security checks. The most impressive analysis thus far was published by The Bipartisan Policy Center, a report written Jay Powell, a former top Treasury official in the George H.W. Bush administration. He makes it clear this would be uncharted and very difficult territory.

But Palin’s statement also suggests she has a fundamental misunderstanding of the debt limit, which we will explore.

The Washington Post examines these statements and also explains some of the basics:

In 1917, Congress decided to do away with the cumbersome procedure and simply gave blanket approval for most types of borrowing. To keep a check on the executive branch, Congress established a limit.

But this is not the same as a credit card limit, a frequently used analogy. A credit card limit prevents someone from making more purchases. You may want to buy that $1,000 refrigerator but if you only have $500 left on your credit card, tough luck—unless you round up some cash.

In this case, Congress has already authorized the expenditures for fiscal year 2011. In many cases, the products, so to speak, have already been purchased, and now the bills are coming due. If the United States government does not pay for these items (which includes interest on the national debt), then it goes in default.

We have had trouble coming up with a real-life equivalent, but here’s stab at it. Suppose the son of a millionaire was told he could spend $100,000 in a year, and not only that, but he was told exactly how he needed to spend the money. (That’s the fiscal year appropriations bills passed by Congress.). At the same time, the parent told the son the bills would not be paid after a certain date unless he got additional permission to pay them. (That’s the debt limit.)

In other words, the money has been spent, but an arbitrary ceiling has been set for how much can be paid. If it doesn’t make much sense, it is not supposed to. But it is the exact opposite of a credit card limit or any such similar analogy

The Washington Post comes to the conclusion that Sarah Palin doesn't know what she is talking about and awards "three Pinocchios" for "significant factual error and/or obvious contradictions":

But past rhetoric by other politicians, even the president, is no excuse for continuing to mischaracterize the debt limit. Palin either has a fundamental misunderstanding of the issue or she purposely is being misleading.

The Washington Post deserves our gratitude for trying to educate Sarah Palin.

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