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What is the cause of the U.S. credit downgrade? (Part 3)

Born in The USA – John Candy – Canadian Bacon

What is the cause of the U.S. credit downgrade? (Part 3)

 
Still of Alan Alda, John Candy, Kevin Pollak, Rip Torn, Michael Moore and Rhea Perlman in Canadian Bacon

7 January 2011
© 1995 Metro-Goldwyn-Mayer Studios Inc. All Rights Reserved.
Still of Alan Alda, John Candy, Kevin Pollak, Rip Torn, Michael Moore and Rhea Perlman in Canadian Bacon

Michael Moore is a liberal movie director and his films have been pitiful. However, I did enjoy the movie “Canadian Bacon” which was very funny. Above is a clip from that movie.

Liberal firebrand Michael Moore called on President Obama to respond to the U.S. credit downgrade by arresting the leaders of the credit-ratings agencies.

On his Twitter feed Monday, the Oscar-winning film director also blamed the 2008 economic collapse on Standard & Poor’s — apparently because it and other credit-ratings agencies did not downgrade mortgage-based bonds, which encouraged the housing bubble and let it spread throughout the economy.

“Pres Obama, show some guts & arrest the CEO of Standard & Poors. These criminals brought down the economy in 2008& now they will do it again,” Mr. Moore wrote.

Standard & Poor’s, one of three key debt agencies, stripped the U.S. federal government of its AAA status Friday night and reduced it to AA+ for the first time in the nation’s history.

I don’t think that Standard and Poors did anything wrong and I think they would have been wrong if they did not act because of all the political pressure they were receiving from the Obama administration. My views are much closer to those below.

Tea partiers aren’t too happy with MoveOn.org, Obama campaign strategist David Axelrod or Massachusetts Democratic Sen. John Kerry for labeling the first-ever downgrade of America’s credit rating by Standard & Poor’s as the “tea party downgrade.”

FreedomWorks President Matt Kibbe told The Daily Caller that liberals are using the slogan to distract Americans from the bad economic numbers he says President Obama’s policies have caused. “Well of course they want to say that,” Kibbe said of how the Obama administration is attempting to blame the tea party movement for the credit downgrade. “They don’t want to talk about how Obama’s fiscal policy led to this and 9.1 percent unemployment.”

Kibbe noted that Obama never provided his own debt plan and added that he believes it was Democrats and liberal Republicans who perpetuated the “out-of-control spending” that led Standard & Poor’s to downgrade the U.S. credit rating from AAA to AA+ with a negative outlook for the first time in the nation’s history.

Let Freedom Ring executive director Alex Cortes said the reason his organization launched TheObamaDowngrade.com is to point out how it’s largely the president’s fault for the credit downgrade. Like Kibbe, Cortes says both political parties are responsible for overspending through the years. But, he argued, Republicans are the “only ones” who have put “serious reforms” on the table in recent months.

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Terry Miller, director of the Center for International Trade and Economics at the Heritage Foundation, talks about Standard and Poor’s downgrade of the U.S.’s debt rating to AA+ from AAA and its impact on investment strategy. Miller speaks with Betty Liu and Erik Schatzker on Bloomberg Television’s “InsideTrack.” (Source: Bloomberg)

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Kerry and Brummett: Downgrade was Tea Party’s fault

They denied that there would be a downgrade. Then they denied it meant anything,  and now they are blaming it all on the Tea Party. The truth of the matter is that the Tea Party has been pushing for a balanced budget. So how could they have been responsible for all this overspending which is the true cause of the downgrade?

John Brummett in his article “Why is this culprit smiling?,” Arkansas News Bureau, August 9, 2011, asserted that Republican leaders “caved to the extreme right and sent the issue to the very brink, compelling S&P’s to downgrade the country’s rating, thus adding further uncertainty to the American economy and threatening the beleaguered every-day American with further equity losses and higher borrowing rates.”

Who were these extreme right people responsible for the downgrade? Brummett identifies them as ” the  tea party-inclined insurgents.”

Daniel Doherty in his excellent article, “Congressman Allen West Defends Tea Party Republicans,” 8/8/2011, Townhall, noted:

During an appearance on Fox & Friends this morning, Congressman Allen West (R-FL) slammed Senator John Kerry for his egregious assertion that House Republicans were exclusively to blame for the U.S. credit downgrade. In 2007, as Mr. West explains on the program, the debt ceiling stood at $8.6 trillion when Democrats held both chambers of Congress. Today, after a $787 billion failed stimulus package and a partisan health care law — the federal deficit has risen to $14.5 trillion.

As Katie Pavlich posted earlier, the Cato Institute has proven in unequivocal terms how our ongoing debt problems stem not from a lack of revenue, but from an addiction to spending. Senator Kerry’s argument, then, that Republicans should be blamed for the impasse – especially when Democrats in the senate have yet to propose a budget in over 800 days – is unfounded and an obvious attempt to denigrate his political rivals.

Furthermore, Senator Kerry’s statement conveniently overlooks the intransigence of his own party. As George Will pointed out today on ABC, 95 House Democrats voted against raising the debt ceiling compared to only 66 House Republicans. The notion, therefore, that Republicans were solely responsible for the near calamitous U.S. default is demonstrably false.

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Democrats’ “tea-party downgrade” spin is self-defeating

 

posted at 8:25 pm on August 8, 2011 by Karl
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Various Dems, including but not limited to Pres. Obama’s presidential campaign adviser David Axelrod, Sen. John Kerry, and fmr. DNC Chairman Howard Dean, were busy Sunday blaming S&P’s downgrade of America’s credit rating on the Tea Party. It is bad spin on at least two levels.

First, the spin creates mixed messages. To quote Jim Treacher: “Yesterday, the downgrade was fake. Today, the Tea Party caused it. ‘This isn’t happening… and it’s all your fault!’” In particular, it muddles the Obama administration’s official position, which is that S&P is mistaken. If the administration is trying to stave off similar downgrades from other ratings agencies (even if the impact is more limited than many think), having the president’s campaign flack suggesting a real phenomenon is at work is counter-productive.

Second, the left’s focus on S&P’s comments about GOP opposition to higher taxes (and avoidance of S&P’s comments on entitlement reform) sends a toxic subliminal message to voters. Consider this from the S&P explanation:

Compared with previous projections, our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act.

Of course, S&P may not be entirely accurate on this point: Obama blew up a grand bargain with Speaker Boehner that included $800 billion in revenue. But taken on its own terms, S&P’s explanation necessarily assumes not only that the GOP will continue to oppose raising tax rates, but also that the GOP will succeed in doing so. S&P’s analysis implies: (a) the House GOP is unlikely to suffer serious losses in 2012 from their position on the debt ceiling; (b) Pres. Obama may not win re-election in 2012; (c) if Pres. Obama is re-elected, he will likely be beaten a third time on taxes, despite being a lame duck with nothing to lose. These are the narratives being advanced by Democratic spin about a “Tea Party downgrade.”

As the WSJ’s James Taranto quipped: “So the argument for re-election is going to be ‘Don’t blame Obama, he was no match for the Tea Party’?”