Rep. Issa: U.S. deserves a downgrade in credit if spending isn’t addressed

posted at 2:00 pm on July 25, 2011 by Tina Korbe

Goldman Sachs suggests a downgrade of U.S. credit is increasingly likely and experts continue to warn that a weakened credit rating would have significant financial repercussions in the markets, but at least one member of Congress has accepted that a downgrade might be deserved.

“Until we stop spending more, we should be downgraded,” Rep. Darrell Issa (R-Calif.), chairman of the House Committee on Oversight and Government Reform, said this morning on the Fox Business Network.

The Hill reports more details:

The credit-rating agencies Moody’s Investors Service and Standard & Poor’s both put the nation’s triple-A credit rating on review for a downgrade this month. The agencies warned that the U.S. might lose its perfect rating if the government defaulted on its debt or failed to take steps to address the deficit.

“If America can, in fact, pay its bills, it’s AAA. If we can’t pay our bills, it doesn’t matter what rating they give us,” Issa said. “Right now we can pay our bills, but we’re heading toward the kind of spending and debt to where someday we wouldn’t be able to pay our bills, and that’s what’s gotta change.”

Like many Republicans, Issa also indicated he does not consider Aug. 2 the drop-dead deadline to raise the debt ceiling. “[Obama] signed funding through September months ago,” he said.

Debate continues about what effects a credit downgrade could have. Some Wall Street traders say discussion about the potentially devastating effects is “much ado about nothing,” and Reuters’ James Pethokoukis says the impact would not be “as frightening as I might have assumed.”

Pethokoukis makes the astute point that the bigger repercussions would probably be political and would hinge on whether President Barack Obama or Republicans were blamed for the downgrade. With Republicans making remarks like Issa’s, it’s hard to think how the American people could fail to see which side is serious about solving the problem. Republicans won’t be sidetracked from offering solutions by discussion of a downgrade or default. On the other hand, all Obama has really done is talk up the terror of a default, even as he proves time and time again — possibly even this past Sunday if reports are true that he turned down a bipartisan debt deal — that he cares more about his reelection effort than he does about the nation’s fiscal health.

That’s what Issa is really saying here — that all the wailing in the world won’t change the reality. A falsely pristine credit rating won’t spare the U.S. from reaping what it has sowed — too much spending — and a downgrade doesn’t mean the U.S. will lose its ability to repay its obligations overnight. It will just come as yet another stark reminder that Congress eventually must make the hard decisions politicians are oh-so-good at procrastinating.

 


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Barack Hussein Odowngrade.

Akzed on July 25, 2011 at 2:03 PM

FDR never allowed our rating to suffer, and that man was more conservative than Ronald Reagan.

Bishop on July 25, 2011 at 2:06 PM

Obama may be the first president to have a downgrading of credit…damn that Bush…

right2bright on July 25, 2011 at 2:09 PM

The truth hurts.

Expect attacks form every quarter, Rep. Issa. This is speaking truth to power.

zmdavid on July 25, 2011 at 2:09 PM

I’m tired of hearing Issa’s name. We keep hearing how he’s going to call the Obama administration on the carpet about this or that and be so tough.

All talk, no action.

cane_loader on July 25, 2011 at 2:15 PM

I’m tired of hearing Issa’s name. We keep hearing how he’s going to call the Obama administration on the carpet about this or that and be so tough.

All talk, no action.

cane_loader on July 25, 2011 at 2:15 PM

You need to catch up on the ATF thing he’s investigating. His next hearing is tomorrow.

Del Dolemonte on July 25, 2011 at 2:20 PM

S&P has been threatening to downgrade US for years since Dec. 2009. Probably longer. Because we keep putting quick fixes in instead of dealing with the root cause: crazzyazz spending.

itsacookbook on July 25, 2011 at 2:26 PM

“The agencies warned that the U.S. might lose its perfect rating if the government defaulted on its debt or failed to take steps to address the deficit.”

I curious to know where these ‘agencies’ were when the Community Reinvestment Act, Fanny Mae, and Freddy Mac were destroying the economy…?

Seven Percent Solution on July 25, 2011 at 2:27 PM

Obama may be the first president to have a downgrading of credit…damn that Bush…

right2bright on July 25, 2011 at 2:09 PM

This is racist. We all know most black men have bad credit because of the WHITE power structure in AmeriKKKa!

SouthernGent on July 25, 2011 at 2:28 PM

I know that if I keep borrowing money from a bank without an end in sight that the bank will eventually STOP lending me money.

Can’t China and other countries just stop lending us money. Wont that have a greater effect on reducing our deficit more so than congress ever could or would?

Avatar72 on July 25, 2011 at 2:31 PM

My Big problem is with the rating agencies themselves…Let’s not forget these are the same people who rated Bear Stearns, AIG, Lehman Brothers, etc. as AAA rated just days before they went belly up. They also rated Mortgage Backed Securities as AAA rated paper…I still don’t understand how they are still in business or even taken seriously..

Political Chef on July 25, 2011 at 2:38 PM

cane_loader on July 25, 2011 at 2:15 PM

I wanna hear Issa’s name more. More investigations…

Fallon on July 25, 2011 at 2:46 PM

This is so complicated.

You mean that having an edgy society producing goods and services like people around the world want and earning foreign exchange like Asian nations results in a thriving economy and good credit?

While keeping open no show government jobs and unions with failing workers in government and failed industries with payments out of budget deficits leads to a budget problem?

IlikedAUH2O on July 25, 2011 at 2:47 PM

I am mostly a US union and GM supporter. We just can’t afford this garbage. Or the (*&*^ wars anymore.

IlikedAUH2O on July 25, 2011 at 2:49 PM

Pethokoukis makes the astute point that the bigger repercussions would probably be political and would hinge on whether President Barack Obama or Republicans were blamed for the downgrade.

Who will be blamed for a downgrade depends on the liberal old media. If they are honest, most of the blame falls on democratics. If they continue to work the democratic party line, Republicans will get blamed. It’s in their hands, and I’m not optimistic.

slickwillie2001 on July 25, 2011 at 3:03 PM

We can’t recover from our addiction to spending our kid’s money until we hit rock bottom.

Hi, I’m Sam and I’m a spendaholic.

pedestrian on July 25, 2011 at 3:04 PM

cane_loader on July 25, 2011 at 2:15 PM

I wanna hear Issa’s name more. More investigations…

Fallon on July 25, 2011 at 2:46 PM

Latest on the “fake scandal” re. the ATF guns:

http://www.foxnews.com/politics/2011/07/25/feds-refuse-to-explain-why-proper-background-checks-werent-conducted-on-fast/

In the latest chapter of the gunrunning scandal known as Operation Fast and Furious, federal officials won’t say how two suspects obtained more than 360 weapons despite criminal records that should have prevented them from buying even one gun.

Under current federal law, people with felony convictions are not permitted to buy weapons, and those with felony arrests are typically flagged while the FBI conducts a thorough background check.

However, according to court records reviewed by Fox News, two of the 20 defendants indicted in the Fast and Furious investigation have felony convictions and criminal backgrounds that experts say, at the very least, should have delayed them buying a single firearm. Instead, the duo bought dozens of guns on multiple occasions while federal officials watched on closed-circuit cameras.

Congressional and law-enforcement sources say the situation suggests the FBI, which operates the National Instant Criminal Background Check System, knowingly allowed the purchases to go forward after consulting with the Bureau of Alcohol, Tobacco, Firearms and Explosives, which initiated Operation Fast and Furious.

Yep, “Fake Scandal”, all right.

Issa’s next hearing on this will be tomorrow. Expect the Democrat Media to totally ignore it.

Del Dolemonte on July 25, 2011 at 3:06 PM

Who will be blamed for a downgrade depends on the liberal old media. If they are honest, most of the blame falls on democratics. If they continue to work the democratic party line, Republicans will get blamed. It’s in their hands, and I’m not optimistic.

slickwillie2001 on July 25, 2011 at 3:03 PM

The Democrat Media has already convinced more Americans than not that it is the Republicans’ fault. Too late.

Del Dolemonte on July 25, 2011 at 3:08 PM

Finally a politician saying what needs to be said.

We deserve a downgrade.

The only way we will get out of the economic malaise we’re stuck in is by allowing interest rates to rise and all the bad blood in the economy to be liquidated.

AUH2O on July 25, 2011 at 3:12 PM

Tina,

Rep Issa was on Imus in the Morning, this morning. You can watch HERE.

Dr Evil on July 25, 2011 at 3:18 PM

Good for Issa. Any individual or business entity that acted the way Obama causes our government to act would get no additional loans.
Obama got a little ahead of himself in his plans to destroy America. That was a second-term agenda item. More and more Americans are beginning to understand that to save our once great nation, we need to ensure that he does not get a second term.
I believe that if we get a fiscally responsible conservative into the white house America can get back on track and regain the highest rating.

GaltBlvnAtty on July 25, 2011 at 3:21 PM

Wasn’t it Rubio who pointed out last week that it is not the debt ceiling, but the debt that is the issue? He is correct, and, of course, Obama wants more debt.

GaltBlvnAtty on July 25, 2011 at 3:23 PM

Can’t China and other countries just stop lending us money. Wont that have a greater effect on reducing our deficit more so than congress ever could or would?

Avatar72 on July 25, 2011 at 2:31 PM

That isn’t how it works. They will just charge us more to carry our debt via higher interest rates on Treasury financial instruments(bonds, etc) we auction off. Less demand equals higher rates and more risk as in any financial contract. As what we have to sell becomes less attractive, we have to sell it at less value because of less demand. As the ratio of our debt to our GDP creeps up, we get closer to the time when so much of our GDP must go to service the debt that we can never pay off the debt and spiral downward because our loan IOUs(bonds) become essentially worthless..

a capella on July 25, 2011 at 3:25 PM

Always follow the money.

j_galt on July 25, 2011 at 3:27 PM

Wasn’t it Rubio who pointed out last week that it is not the debt ceiling, but the debt that is the issue? He is correct, and, of course, Obama wants more debt.

GaltBlvnAtty on July 25, 2011 at 3:23 PM

Yep. Honestly, I’m not sure Obama understands the difference. I’m damned sure he doesn’t understand the difference between liquidity and solvency.

a capella on July 25, 2011 at 3:29 PM

After all the work the GOP has put into coming up with plan after plan after plan, when all is said and done the left is going to credit Harry Reid and Obama with saving us from economic doom. They’re already doing it on Politico. Disgusting.

scalleywag on July 25, 2011 at 3:54 PM

After all the work the GOP has put into coming up with plan after plan after plan, when all is said and done the left is going to credit Harry Reid and Obama with saving us from economic doom. They’re already doing it on Politico. Disgusting.

scalleywag on July 25, 2011 at 3:54 PM

Hey, I have a great idea. Why don’t we let Politico run our Republican presidential primary debates?

slickwillie2001 on July 25, 2011 at 4:31 PM