U.S Credit Rating Has Been Downgraded

[Drekkan85]

You know, what REALLY kills me is the following:

The S&P lowered the rating precisely because the two sides couldn't compromise and put aside partisan bickering for the good of the nation.

Tea Party supporters couldn't realize that at 14% revenues were FAR too low and needed raising.
Democrats couldn't realize that entitlments desperately needed reform.

So far, we've had Variant valiantly pointing out that what's needed is compromise and adult behaviour in government. But other than that...

This thread is just partisan victory over who's to blame. The S&P were quite clear - they're BOTH to blame. We need more revenues and spending cuts. Clear as crystal. But it's easier for poster to say,

"Yeah. That's what we need, more responsible behaviour. Stupid Democrats not being responsible and refusing to do what we say!" and vice versa.

I just giggle at the unintentional hilarity on display.

 

[lordbt]

You know, what REALLY kills me is the following:

The S&P lowered the rating precisely because the two sides couldn't compromise and put aside partisan bickering for the good of the nation.

Tea Party supporters couldn't realize that at 14% revenues were FAR too low and needed raising.
Democrats couldn't realize that entitlments desperately needed reform.

So far, we've had Variant valiantly pointing out that what's needed is compromise and adult behaviour in government. But other than that...

This thread is just partisan victory over who's to blame. The S&P were quite clear - they're BOTH to blame. We need more revenues and spending cuts. Clear as crystal. But it's easier for poster to say,

"Yeah. That's what we need, more responsible behaviour. Stupid Democrats not being responsible and refusing to do what we say!" and vice versa.

I just giggle at the unintentional hilarity on display.

The issue is entitlements, and they went unaddressed. That is why we were downgraded. Frankly, a government that runs the level of debt and makes the level of unfunded promises that the US government does deserves to be downgraded. And this is not something unique to the US or US politicians. Look at Europe. Their debt and their inability to reign it in might drag the whole world down with them. And we have a moron in the White House that wishes to emulate them.

 

[okafor]

You know, what REALLY kills me is the following:

The S&P lowered the rating precisely because the two sides couldn't compromise and put aside partisan bickering for the good of the nation.

Tea Party supporters couldn't realize that at 14% revenues were FAR too low and needed raising.
Democrats couldn't realize that entitlments desperately needed reform.

So far, we've had Variant valiantly pointing out that what's needed is compromise and adult behaviour in government. But other than that...

This thread is just partisan victory over who's to blame. The S&P were quite clear - they're BOTH to blame. We need more revenues and spending cuts. Clear as crystal. But it's easier for poster to say,

"Yeah. That's what we need, more responsible behaviour. Stupid Democrats not being responsible and refusing to do what we say!" and vice versa.

I just giggle at the unintentional hilarity on display.

Oh yes, valiant variant. LOL

Here's a hint at reality. His idea of compromise is the same as we've had for decades; more spending, bigger government. That is not compromise.

How about this for an idea? Instead of the narrative being "This is how much we want to grow the government by, so let's compromise on how we pay for it" it becomes "This is how much we want to shrink the government so let's compromise on what we cut to do it?"

 

[Drekkan85]

The issue is entitlements, and they went unaddressed. That is why we were downgraded. Frankly, a government that runs the level of debt and makes the level of unfunded promises that the US government does deserves to be downgraded. And this is not something unique to the US or US politicians. Look at Europe. Their debt and their inability to reign it in might drag the whole world down with them. And we have a moron in the White House that wishes to emulate them.

Again,read the reasons. The issue is entitlements and declining revenues. It's a two sided coin. The problem the S&P has, and why their outlook is so bleak, is that they see both sides committed to only one side of said coin. Democrats only want to raise revenues, Republicans only want to cut spending.

It's a balance, and in the old days that system worked decently (talking 30~40 years ago) because the centre could hold. People that opposed each other politically could reach across the aisle and come to agreements. But the polarization of the electorate and politics in general (see this thread for evidence) makes that kind of compromise undoable.

As for Okafor - I encourage you to re-read Variant. I don't believe he wants entitlements untouched. Indeed, there's a very large component of people - usually economically sophisticated - that believe they NEED to be cut. Raise the benefit age of recipients (we're living far longer now, so why should we have the same 'retirement age'), remove the contribution cap, and means test Social Security and Medicare. Also, tie it to a less generous inflation index.

But on the other side, you have to come to grips with the fact that only 14% of GDP is coming in as income tax compared to historic 19~20%. In an economy the size of the US, that's nearly a trillion dollars worth of short fall - which would go a long way towards reducing the debt. The whole thing about the Laffer curve is there IS a point at which reducing taxes does reduce revenue - sometimes a tax increase IS necessary.

THAT'S why the S&P cut the rating. Because our politicians like peddling to the lesser angels of our nature, they like taunting their opponents and being obstinate instead of finding a compromise that arrives at a solution (in this case, spending/entitlement cuts with revenue increases).

 

[okafor]

Again,read the reasons. The issue is entitlements and declining revenues. It's a two sided coin. The problem the S&P has, and why their outlook is so bleak, is that they see both sides committed to only one side of said coin. Democrats only want to raise revenues, Republicans only want to cut spending.

It's a balance, and in the old days that system worked decently (talking 30~40 years ago) because the centre could hold. People that opposed each other politically could reach across the aisle and come to agreements. But the polarization of the electorate and politics in general (see this thread for evidence) makes that kind of compromise undoable.

As for Okafor - I encourage you to re-read Variant. I don't believe he wants entitlements untouched. Indeed, there's a very large component of people - usually economically sophisticated - that believe they NEED to be cut. Raise the benefit age of recipients (we're living far longer now, so why should we have the same 'retirement age'), remove the contribution cap, and means test Social Security and Medicare. Also, tie it to a less generous inflation index.

But on the other side, you have to come to grips with the fact that only 14% of GDP is coming in as income tax compared to historic 19~20%. In an economy the size of the US, that's nearly a trillion dollars worth of short fall - which would go a long way towards reducing the debt. The whole thing about the Laffer curve is there IS a point at which reducing taxes does reduce revenue - sometimes a tax increase IS necessary.

THAT'S why the S&P cut the rating. Because our politicians like peddling to the lesser angels of our nature, they like taunting their opponents and being obstinate instead of finding a compromise that arrives at a solution (in this case, spending/entitlement cuts with revenue increases).

I understand that S&P is only interested in our ability to carry the debt load without threat of default, and are not really interested in how the expenditures and taxes are balanced. They would be happy if our expenditures where 100% of GDP if our taxes matched that and we were in no danger of defaulting. They simply don't make judgements on the appropriate level o entitlements.

On the other hand, there are those of us who do care about the appropriate level of entitlements, and we stand on principle when we say "No more. Iin fact, cut the entitlements and not just around the margins." That is the core of our fiscal position, and it isn't based seeking "politcal advantage" as variant is convinced, it's based on core political beliefs. It is an insult to make the case that we're interested only in political advantage. Now when liberals are ready to acknowledge our views, and are ready to reach REAL compromise, we will be less dogmatic. But simply reducing deficits by a mix of tax increases and only minor entitlement cuts around the margins is not compromise in our view, and we simply will not accept it.

 

[lordbt]

Like I said, we deserved a downgrade and it is not likely to be the last. I wouldnt support any tax increase on anyone until entitlements have been reformed. If that leads to downgrades, so be it.

 

[PHenry42]

How nice. Unwillingness to compromise, by hardliners believing they must enforce their way at any cost or the country will be destroyed, brought about the current situation. And the proposed solution is more of the same

 

[PHenry42]

Now when liberals are ready to acknowledge our views, and are ready to reach REAL compromise, we will be less dogmatic. But simply reducing deficits by a mix of tax increases and only minor entitlement cuts around the margins is not compromise in our view, and we simply will not accept it.

How is it not compromise? They get a bit of what they want (tax hikes), you get a bit of what you want (spending cuts), and both measures contribute towards balancing the budget.

What currently was passed wasn't compromise either. It was more like, you get a part of what you want and the liberals get nothing at all.

You ask for liberals to acknowledge your views, but you've shown little willingness to acknowledge theirs. Or else, what was the following about:

That's a solution liberals would follow, but not conservarives. We'll settle for defeating you and getting this gang of economically ignorant thugs out of power.

 

[Satt]

How is it not compromise? They get a bit of what they want (tax hikes), you get a bit of what you want (spending cuts), and both measures contribute towards balancing the budget.

"Bits" don't even begin to cover it.

 

[RisingSpirit]

I wonder what the economy would look like if we haven't gone to war in Iraq and Afghanistan.

How much did the Iraq war cost us?

 

[Drekkan85]

Like I said, we deserved a downgrade and it is not likely to be the last. I wouldnt support any tax increase on anyone until entitlements have been reformed. If that leads to downgrades, so be it.

And the other side takes the precisely opposite view. This leads to the downgrades, which in turn is essentially burning money making everything even more expensive.

The proper approach would be to come to the table with a comprehensive plan that includes both revenue increases and entitlement reform. Have moderates from both parties draw up the plans, and make it clear that you won't let rogue fringe elements destablize it.

Oh wait, but the US Congress increasingly doesn't have moderates.

 

[PHenry42]

Seems like the chicken-race is still on, and a crash happened even though the Democrats swerved (too late). But as the wrecks are entangled, it seems like both drivers are still plunging the wrecks deeper into each other rather than saving their cars.

Hey, it's a much more factual analogy than the family economy ones thrown around nowadays!

 

[lordbt]

How nice. Unwillingness to compromise, by hardliners believing they must enforce their way at any cost or the country will be destroyed, brought about the current situation. And the proposed solution is more of the same

The country is not being destroyed by people who are unwilling to compromise with a confiscatory, welfare state, it is being destroyed by the confiscatory welfare state itself. You dont solve the problems brought about by a bloated government by giving the government more to spend.

 

[Fantine]

One pain-free way to reform Medicare that the legislators in big business' pockets aren't considering:

Negotiate for pharmaceutical prices, like they do in Europe, and like the Veterans Administration does in the U.S.

 

[MachZer0]

So you're blaming him for spending on programs your party wants money spent on? Never change Republicans...never change.

Apparently the things you mention are things Democrats want, since, as I said, they had full control for two years and kept spending, and kept spending and kept borrowing to compensate. Even so, you want to blame Bush. Obama's finger pointing at Bush is a sign of his weakness in the area of leadership

 

[MachZer0]

Oh give it a rest, Okafor, it was pretty blatantly the Tea Party forcing Boehner to follow their own insane agenda holding up the process. This is self-evident to just about everyone here.

It's funny to hear people call a balanced budget an insane agenda.

 

[MachZer0]

[]» S&P Drops U.S. Credit Rating to AA+ // Obama and Reid’s Crowning Achievement - Le·gal In·sur·rec·tion[/b]

Democrats own the downgrade. They fought Republicans and Tea Party supporters every step of they way, and forced a deal which was insufficient. They played class warfare and race politics against arguments that we needed to drastically change our spending habits.

This is Barack Obama and Harry Reid’s crowning achievement.


Yes Professor Jacobson, they own it, but even now they live in denial and have a thousand accusations against others. So, don't expect them to lpay attention, it's like talking to a wall.

This is Obama's legacy, the first time in American history that our credit rating has been downgraded.

 

[Amiga1200]

I can't believe what I'm reading. The Democrats, with a few exceptions like Kucinich and Sanders, are moderates. Where is the radicalism in any of their proposals!? Even the furthest left-wing set of proposals would not get us to the level that right-moderate governments in Europe have successfully lived with.

Most importantly, stop lying about out-of-control entitlement spending. Those on the board saying we spend too much on entitlements are either heartless, insane, or view the entire world as consisting of the U.S. My rationale? Entitlement spending in the U.S. is 26th out of 34 nations in the OECD, calculated as a percentage of GDP.

Or to put it another way: Germany, the most competitive economy in the world on a per-capita basis (they export more raw goods than we do with 1/4 of the population we have), a nation with little debt and strong industrialization, spends 25% of GDP on entitlements and social programs, as much as our ENTIRE FEDERAL BUDGET. France spends 28%, Sweden 27%, Austria 26%, Belgium and Denmark 26%, and Finland 25%. Hardly the dregs of the first-world in that list. Our total social spending, across all levels of government, is 16%, despite having much higher poverty/child poverty rates, a much larger and more depressed class of working poor, longer working hours (over 300 more per year!), etc... than all of these nations. So, we spend far less on entitlements despite having more people in need and more income and wealth inequality.

The solution? LESS entitlements and more tax cuts that have exacerbated the unparalleled flow of assets from the bottom 90% into the hands of the top 10% and top 2% most specifically! You must be kidding, especially when we have a massive demand shortage with huge levels of unencumbered free cash sitting in the hands of major corps. The velocity of money is much higher in the hands of the poor and middle class, which is why unemployment benefits and welfare stimulate the economy much faster than tax cuts to those with no immediate need to spend. And, nearly all persons who pay significant taxes work... meaning that, simply by knowing they work and have an income, have SOMEWHAT less need to spend (as a group) than the unemployed or impoverished. We have the lowest-wage, lowest-benefit jobs extant in the rich half of the first-world, so I don't mean to exaggerate how necessary entitlement spending is to many working folks as well (bottom 40% of households average about $2200 in total assets!!!!).

I'm coming to believe that the co-opting of the Christian right by radical free-market propertarians was the coup of the century, because what I'm seeing about economics on this board cannot be, in any way, rooted in reality.

By the way, Ireland and Greece, the two biggest debt-bombs in the EU, have revenue rates far lower than the OECD average, just like us.

 

[okafor]

For decades "compromise" has meant compromise within the limits - more precisely the lack of limits - of the liberal view of the appropriate role of government, which has invariably meant bigger government and more spending.

Noe "compromise" is going to mean compromise within the limits of the conservative view of the appropriate role of government, which will mean smaller government and actual reduction to spending. We are perfectly willing to compromise under that scenario, so, liberals, look to yourselves when you talk of an unwillingness to compromise.

 

[lordbt]

This is Obama's legacy, the first time in American history that our credit rating has been downgraded.

Exactly. The debt limit is a distraction. It is Obamas conscious decision to expand the role of government and wildly increase the deficit that has lead to the decline in our credit rating.

Perhaps someday his face will appear on the trillion dollar bill. It would be an appropriate homage to his legacy of debt.