Breaking: S&P downgrades U.S. to AA+; Update: S&P statement added; Update: No chance of downgrade, said Geithner in April

posted at 8:39 pm on August 5, 2011 by Allahpundit

With a “negative outlook” to boot.

America is now a risky investment.

U.S. Treasuries, once undisputedly seen as the safest investment in the world, are now rated lower than bonds issued by countries such as the UK, Germany, France or Canada.

The outlook on the new U.S. credit rating is negative, S&P said in a statement, a sign that another downgrade is possible in the next 12 to 18 months.

See the last few updates in the other thread for details on this afternoon’s drama between S&P and the White House. Supposedly the agency admitted privately that it goofed in using the wrong debt-to-GDP baseline — a $2 trillion error. But when you’re $14 trillion in the hole and set to add $6 trillion more by the end of the decade, what’s $2 trillion, really? A deadbeat’s a deadbeat.

Odds of that negative outlook turning into a further downgrade if the Super Committee chokes: High. Stand by for updates.

Update: A grumpy White House points to S&P’s math error and calls it “amateur hour.”

Update: Zero Hedge has the text of S&P’s statement. The debt-ceiling deal wasn’t good enough:

We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process. We also believe that the fiscal consolidation plan that Congress and the Administration agreed to this week falls short of the amount that we believe is necessary to stabilize the general government debt burden by the middle of the decade…

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. Republicans and Democrats have only been able to agree to relatively modest savings on discretionary spending while delegating to the Select Committee decisions on more comprehensive measures. It appears that for now, new revenues have dropped down on the menu of policy options. In addition, the plan envisions only minor policy changes on Medicare and little change in other entitlements, the containment of which we and most other independent observers regard as key to long-term fiscal sustainability…

When comparing the U.S. to sovereigns with ‘AAA’ long-term ratings that we view as relevant peers–Canada, France, Germany, and the U.K.–we also observe, based on our base case scenarios for each, that the trajectory of the U.S.’s net public debt is diverging from the others. Including the U.S., we estimate that these five sovereigns will have net general government debt to GDP ratios this year ranging from 34% (Canada) to 80% (the U.K.), with the U.S. debt burden at 74%. By 2015, we project that their net public debt to GDP ratios will range between 30% (lowest, Canada) and 83% (highest, France), with the U.S. debt burden at 79%. However, in contrast with the U.S., we project that the net public debt burdens of these other sovereigns will begin to decline, either before or by 2015.

Not only can’t the Super Committee fail, it’ll be under enormous public pressure to reach a grand bargain. That’s the silver lining in this cloud — they have to get serious now. They have no choice.

Update: A footnote to a bleak day via Dan McLaughlin: Rick Perry gets another point of contrast for his campaign.

Update: Is this an economic mega-quake or a slight tremor? There’s no way to know since we’ve never been here before, says WaPo’s Dyan Matthews, but here are the arguments for both scenarios.

Update: This video from April is now circulating on Twitter. No comment necessary.


Update: The GOP was planning to push their message for a balanced-budget amendment during the August recess. The downgrade will help that effort, but I wonder after this whether we’ll have an August recess after all. Is Congress really going to sit back for another four weeks while the economy tries to cope with this news?

Update: A “psychological haymaker”:

But the move by S&P could serve as a psychological haymaker for an American economic recovery that can’t find much traction, and could do more damage to investors’ increasing lack of faith in a political system that is struggling to reach consensus on even everyday policy items. It could lead to the prompt downgrades of numerous companies and states, driving up their costs for borrowing. Policy makers are also anxious about the hidden icebergs the move could suddenly reveal…

Some investors believe Treasurys will remain a safe haven in a volatile world, even without a solid triple-A credit rating. Others believe the U.S. will be forced to pay higher interest rates, perhaps about 0.5 percentage points, simply because they are seen as being slightly more risky than before. While only a slight gain, such a jump would increase the cost of a wide array of debt, from a home mortgage to the trillions carried by the U.S. government itself…

J.P. Morgan Chase & Co. analysts estimate some $4 trillion worth of Treasurys are pledged as collateral by borrowers such as banks and derivatives traders. If that collateral isn’t considered as high quality by lenders, the borrowers could be required to cough up more cash or securities to put the minds of lenders at ease.

That could force investors to sell off other assets to come up with the money. In a worst case scenario, credit markets could seize up, as they did during the Lehman Crisis.

Update: Fannie Mae and Freddie Mac will probably be downgraded too. So much for any near-term housing market recovery.

Update: The Treasury Department is indignant: “A judgment flawed by a $2-trillion error speaks for itself.”

Update: Warren Buffett, whose own company was downgraded by S&P, thinks it’s a big nothingburger:

Buffett to my colleague Liz Claman: Did the US deserve this? “Buffett: “NO.”Are you worried about the markets Monday? “NO.”

Update: Lefty Kevin Drum wonders how the debt-ceiling deal could have made the U.S. an instant credit risk given that (a) the sides did reach a deal, and were never seriously at risk of not doing so, and (b) there was zero chance of an actual default. Tax revenues would have covered interest payments to creditors. More:

Look: the United States has been running up big debts for the past couple of years because we’re trying to climb out of an epic recession. That’s perfectly justifiable. And our focus on reining in our long-term debt is, literally, less than a year old. Pretending that our political system is fundamentally broken because we haven’t solved our long-term problems in a few months is staggeringly panicky and ahistorical, and S&P’s obsession with hitting a $4 trillion target for medium-term deficit reduction is economically vacuous. If we still can’t get our act together in four or five years, then fine. We deserve a downgrade. But a few months? That’s crazy. It’s the kind of hair-trigger reaction that belongs on cable shoutfests, not in the boardroom of a sober, 150-year-old financial firm.

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Comment pages: 1 6 7 8 9

Just got in.

WOW. O.O

Thank you President Obama.

El_Terrible on August 5, 2011 at 11:54 PM

It is what it failed to do: anything serious.

AshleyTKing on August 5, 2011 at 11:27 PM

Yes.

Of course there is no risk of the debtor covering interest payments with tax revenues today. The risk arises from the debtor’s potential inability to cover the interest payments with tax revenues tomorrow.

rukiddingme on August 5, 2011 at 11:55 PM

Now is it time for the pitchforks?

justltl on August 5, 2011 at 11:18 PM

Actually, it’s way past time.

Midas on August 5, 2011 at 11:56 PM

this person says nothing when he speaks..

listen! just no meaningful words..

greenspan ftw! (never thought I say that)

amend2 on August 5, 2011 at 11:57 PM

unseen on August 5, 2011 at 9:46 PM

I haven’t heard that B.O. may close the market on Monday.

There would be “h” to pay if that was tried.

bluefox on August 5, 2011 at 11:57 PM

“We saved the economy.” -Obama adviser Lord Protector of Chicago Rahm Emmanuel (D)

Good Lt on August 5, 2011 at 11:46 PM

Keep up with the times, Good Lt.

KingGold on August 5, 2011 at 11:57 PM

HondaV65 on August 5, 2011 at 9:48 PM

Honda, Neil Cavuto was on Greta. Don’t know if you caught that tonight or not. But he explained quite a bit and I remember he talked about what financials S&P rated and they were different than Moody’s. He did say whether one agreed with S&P or not didn’t matter, they were the only one in “town” so to speak.

bluefox on August 6, 2011 at 12:03 AM

Maybe you should reconsider that whole lawyer thing…..

didymus on August 5, 2011 at 11:53 PM

Look how far it took Obama.

Schadenfreude on August 6, 2011 at 12:03 AM

Unexpectedly expected.

Hillary cashed in pretty well for being a lawyer though the guy who knew too much about it got, uh, Fosterized by the Clintoon, shall we say, procedure.

viking01 on August 6, 2011 at 12:17 AM

Historic President indeed…

RedSoxNation on August 6, 2011 at 12:22 AM

JellyToast on August 5, 2011 at 10:25 PM

A Big Hug to you!!! Beautifully written and Uplifting!!

bluefox on August 6, 2011 at 12:34 AM

The Treasury Department is indignant: “A judgment flawed by a $2-trillion error speaks for itself.”

tztzt – the treasury department, this paragon of unflawed monetary policies, decisions and forecasts, so justly indignant :-)…

jimver on August 6, 2011 at 12:34 AM

He’ll need that vehicle, under which he’ll throw some scapegoats.

honsy on August 5, 2011 at 10:51 PM

like who? nobody’s left…he threw pretty much everybody under said vehicle…oh, yeah, poor Timmy comes to mind…

jimver on August 6, 2011 at 12:38 AM

And now the real hurt begins!

Scorched_Earth on August 6, 2011 at 12:40 AM

suckers…

equanimous on August 6, 2011 at 12:41 AM

I think the first thing to do is suspend all pay and perks of all elected officials and their staffs until this is resolved…

Seven Percent Solution on August 6, 2011 at 12:42 AM

Any wagers on how the markets will react to this on Monday?

Scorched_Earth on August 6, 2011 at 12:43 AM

You jump off the bridge first, ok? I’ll follow, I promise.

JellyToast on August 5, 2011 at 10:44 PM

Thread Winner!..Excellent post!..:)

Dire Straits on August 6, 2011 at 12:44 AM

I wonder if this means that President MomJeans will have to use a downgraded size of styrofoam Greek columns for his big speech at their Convention next year. Things keep going this way, and Skippy might find himself in a empty field -reading from TOTUS to the mice and locusts – who will undoubtedly be thrilled that he accepts their nomination! I’m just trying to find something to laugh about tonight.

redwhiteblue on August 6, 2011 at 12:48 AM

At this stage Buffett probably cares about his investors as much as Madoff.

Meanwhile, Obama has managed to throw the bus under the bus and it’s headed off the high mountain road faster than a Clintoon ex-friend.

viking01 on August 6, 2011 at 12:49 AM

Those dems must really be kicking themselves for not raising taxes when they controlled both sides of congress. Remind them of that when they try to blame the GOP.

Ronnie on August 6, 2011 at 12:50 AM

Obama has managed to throw the bus under the bus and it’s headed off the high mountain road

No problem. He can get a tow from AAA AA+.

Emperor Norton on August 6, 2011 at 12:51 AM

Zero must have thought he heard Revrum’ Wrong shouting “God d@mn the US of A-A-A.”

viking01 on August 6, 2011 at 12:55 AM

Any wagers on how the markets will react to this on Monday?

How does Superman react to Kryptonite?

Emperor Norton on August 6, 2011 at 12:58 AM

If they came to America, they will come to the party that represents itself as America! The same original founding ideals! The same original and founding principles!

But for this, we need passionate leadership that can make that distinction!

JellyToast on August 5, 2011 at 10:25 PM

Truth is so beautiful! Good post JellyToast. I didn’t mean to do that rhyme thing…

redwhiteblue on August 6, 2011 at 1:02 AM

Those dems must really be kicking themselves for not raising taxes when they controlled both sides of congress. Remind them of that when they try to blame the GOP.

Ronnie on August 6, 2011 at 12:50 AM

Yep, that was some clever strategy, eh? Though maybe they even thought a downgrade would help them. “Yeah, THAT’S the ticket! Let’s tank the stock market and spike interest rates! THAT’ll make those Republicans agree to a tax increase FOR SURE!!”

lolz

rockmom on August 6, 2011 at 1:04 AM

Insider trading.

kagai on August 6, 2011 at 1:06 AM

Didn’t post my link: http://is.gd/h6deT8 (Youtube video)

kagai on August 6, 2011 at 1:06 AM

unseen on August 5, 2011 at 11:34 PM

Re: 2008. Yes, exactly. All Planned and then silence.
Easy to figure out by what transpired afterward.

bluefox on August 6, 2011 at 1:15 AM

Hm. Who’s to blame for that?

crr6 on August 5, 2011 at 8:44 PM

..Jesus, Lady, it must be hard functioning on a daily basis with your head so completely jammed up your rectum!!!

The War Planner on August 6, 2011 at 1:16 AM

Maybe Obama will throw Geithner under the bus now.

Schadenfreude on August 6, 2011 at 1:19 AM

Update: Is this an economic mega-quake or a slight tremor? There’s no way to know since we’ve never been here before, says WaPo’s Dyan Matthews, but here are the arguments for both scenarios.

There is only one thing that is important, and that’s the interest on the debt. If it rises 10x from current rates then we’re doomed(we are). I know 10X sounds like a lot, but currently the 2 year bond is at .42 so it will only require a rise to %4.2 and considering that 2 year Greek bonds were yielding %23 then it should be pretty obvious where this is headed. Looks like this end of the world thing is finally getting started!

DFCtomm on August 6, 2011 at 1:23 AM

Actually, yes. Lost the house, but paid off the bankruptcy early. Rent, but no overhead. Work but not at the old level. Beats no work at any level. Was it because of the toxic Donks? Spit on the sidewalk to that.

Limerick on August 5, 2011 at 9:02 PM

..you probably won’t see this because of the length of this thread, but hang in there, old son. They say that tough times never last but tough people do!

The War Planner on August 6, 2011 at 1:24 AM

prediction: obama will be primaried now

ConservativePartyNow on August 6, 2011 at 1:26 AM

prediction: obama will be primaried now

ConservativePartyNow on August 6, 2011 at 1:26 AM

Not necessary. You only need to trot out that which he has been trying to hide. No need to primary him when you can just reveal his birth certificate or whatever records he’s been trying to keep out of sight. He has a built in self destruct mechanism.

DFCtomm on August 6, 2011 at 1:29 AM

prediction: obama will be primaried now

ConservativePartyNow on August 6, 2011 at 1:26 AM

like who, an even bigger joke than him?…they’re all like that and worse on that side of the spectrum…though arguably it can’t get worse than this…

jimver on August 6, 2011 at 1:30 AM

prediction: obama will be primaried now

ConservativePartyNow on August 6, 2011 at 1:26 AM

Either primaried or he’ll step down and not run. Then he steals all that campaign cash and is never heard from again.

Hey, a girl can dream, right?

Knucklehead on August 6, 2011 at 1:31 AM

And there is no way in hell the US deserves a Triple A when we’re at 100% Debt/GDP in the debt and our annual deficits are running at 10% of GDP.

Norwegian on August 5, 2011 at 5:26 PM

From the other thread

Exactly. Only lefties demand As for poor or no school work.

A smart R candidate would use the analogy wisely.

Schadenfreude on August 6, 2011 at 1:32 AM

The government has been underwriting the market since it hit the bottom. On every light day, they come along and push prices up. If Monday is a heavy day, it will tank 700 points. If it is a light trading day, it will tick up 300 points.

astonerii on August 6, 2011 at 1:33 AM

Update: Lefty Kevin Drum wonders how the debt-ceiling deal could have made the U.S. an instant credit risk given that (a) the sides did reach a deal, and were never seriously at risk of not doing so, and (b) there was zero chance of an actual default. Tax revenues would have covered interest payments to creditors.

Dang! A racist terrorist extremist Tea Partier writes at mother jones? How long till they can his sorry behind?

Freddy on August 6, 2011 at 1:35 AM

Maybe Obama will throw Geithner under the bus now.

Schadenfreude on August 6, 2011 at 1:19 AM

that’s the most logical pick…besides there’s nobody left to throw but the bus itself, as somebody on this thread put it..and then what good would it do? he will bring a clone of Timmy from Harvard or Berkeley or some other similar place…

jimver on August 6, 2011 at 1:36 AM

Exactly. Only lefties demand As for poor or no school work.

Schadenfreude on August 6, 2011 at 1:32 AM

he’s shocked to discover that positive discrimination is in place only at Harvard and Columbia, but not so much at S&P :)…

jimver on August 6, 2011 at 1:47 AM

prediction: obama will be primaried now

ConservativePartyNow

It will never happen, at least not in any serious way. The Dems would like to keep the White House, and primarying their own incumbent pretty much guarantees they won’t.

xblade on August 6, 2011 at 2:21 AM

This is the first time in my life that this has happend to the USA, I am 54 years. Has any other sitting president had this happen to them ? he FAILED the WE THE PEOPLE.

ColdWarrior57 on August 6, 2011 at 2:31 AM

The Treasury Department is indignant indigent

FIFY.

Inkblots on August 6, 2011 at 2:38 AM

And the blame game commences…

Scott H on August 5, 2011 at 8:43 PM

What I was thinking-just blame your political enemies loud enough and hard enough and everything will be fixed! LOL

We’ve been heading towards this for decades.

We can’t ship millions of jobs overseas, allow illegal immigrants to flood in and drive down wages, support millions who don’t want to work, tax the middle class/small businesses up the ying-yang, bail out banks/companies, suffer Corporate Ponzi schemes, give tax breaks to those who make their money overseas, fight multiple wars with no goals/exit strategies, protect our “allies” for free, allow companies to inflate their stock values, force workers to accept less pay/benefits, depend on foreign countries for energy, and on and on and on and expect positive results.

We’ve had to pay for World War I, the New Deal, World War II, the GI Bill, the Marshal Plan, the Korean War, the Cold War, the Great Society, Vietnam, SDI, Iraq, Afghanistan and a host of other military missions. We support the U.N. and its self-serving Socialist programs, we dole out billions in foreign aid.

You can’t pi$$ away the wealth of our people for 100 years, allow millions of foreigners to come here and basically colonize us rather than becoming Americans, and turn our backs on those things that made us a great nation and expect anything good to come of it.

But the NFL and college football is almost upon us, the World Series is coming up in a couple of months, so grab a beer and watch the Big Game in the Arena and all will be well.

Rome.

Dr. ZhivBlago on August 6, 2011 at 2:41 AM

Peter Schiff,the CEO of Euro Pacific Capital, just said on Fox News that he thinks that AA+ is still too high of a credit rating.

scrubjay on August 6, 2011 at 2:44 AM

OK- taking bets on who will call the S&P racist first. I have $20 on Chris Matthews.

ramrants on August 6, 2011 at 2:52 AM

If things don’t change (they won’t if Obama is re-elected), we’re gonna get the AA rating in a couple years.

On a side note, crr6 is going to be a lawyer? Pity her clients.

B Man on August 6, 2011 at 2:56 AM

The Treasury Department is indignant indigent

FIFY.

Inkblots on August 6, 2011 at 2:38 AM

nah, they’ll just change the settings of that printing machine and make it work overtime…

jimver on August 6, 2011 at 3:08 AM

Peter Schiff,the CEO of Euro Pacific Capital, just said on Fox News that he thinks that AA+ is still too high of a credit rating.

scrubjay on August 6, 2011 at 2:44 AM

I suppose the rating agencies are holding out for the possibility (probability) that our illustrious Dear Leader and all those Conservatives in Congress (you know, those fighting for the “little people” for the first time in 100 years all of a sudden…I know, it’s miraculous!) will raise more revenue by gouging the middle class and small businesses.

Dr. ZhivBlago on August 6, 2011 at 3:08 AM

Basically having a good or bad credit rating is based on your ability to pay it back.

We’re 14 trillion in the hole and 1.6-7 trillion this/last year.

And the spending “Cuts” are phony. In truth, the congress is doing nothing to really stop spending. Which means we’re not going to be able to pay down our debt for a loooong time.

They see DC isn’t serious about our debt, so this is what they do. It was inevitable. But I didn’t expect it to happen THIS soon.

Of course if S+P reduces us to AA in 2013, and there’s a republican president, the dems will just say it’s because of him/her.
SSDD.

B Man on August 6, 2011 at 3:16 AM

Meh. I’m not worried about this. I think the economy will be okay. People should take this opportunity to buy stocks since they are cheap right now.

SoulGlo on August 6, 2011 at 3:19 AM

When I say “SSDD” I’m not talking about the credit downgrade, just talking about where the blame will go.

What a mess we’re in.

B Man on August 6, 2011 at 3:20 AM

The lsm is sure helping dear leader putting the onus on the gop…..they passed a budget, they passed CCB….crickets chirping on the dems role in this…..infuriating

cmsinaz on August 6, 2011 at 3:27 AM

cmsinaz on August 6, 2011 at 3:27 AM

I agree!..:)

PS..It is great to see you ..:)

Dire Straits on August 6, 2011 at 3:56 AM

Car/ditch/boots/slurpees/keys/the (R)s don’t know how to drive.
 
Nice driving, Mr. President.

rogerb on August 6, 2011 at 4:06 AM

Buffet is not a muffin-head like most of Obama’s people. I bet he is already positioned to take advantage of the downgrade and whatever happens Monday. Of course he’s not worried. He’s taking advantage of it.

{^_^}

herself on August 6, 2011 at 4:06 AM

Umm, how did these politicians in Washington think they could take the national debt from 8 trillion $$ in 2007 when the Dems took over Congress, run up $6 trillion in deficit spending in just 4 years, with another 10 trillion in the next 10 years, unemployment up at 9%, more people than ever on food stamps, etc. and have no negative consequences?

This is like a family in America, refinancing their home several times, taking out equity until they have one of those 125% loan to value loans, have their property value drop in half, they max out 10 credit cards and go get 10 more, and soon have revolving debt 5 times their annual income and then wonder why they can’t make their bills. Then they get laid off and have no savings to fall back on.

I just don’t understand why Congress just can’t see they can’t keep spending like this. I think most of us are so pissed off that we ran out of nails to spit out at least 2 years ago.

karenhasfreedom on August 6, 2011 at 4:25 AM

A) Geithner needs to be fired immediately.

B) This should be the nail in The One’s re-election coffin.

JetBoy on August 6, 2011 at 5:25 AM

Watch for Sep. 3rd.

promachus on August 5, 2011 at 9:22 PM

No, September 2nd, on her local AK radio station. Then, she’ll roar into Iowa on the 3rd.

Maybe the credit downgrade will change her plans and she’ll announce earlier.

The earlier the better.

Opinionator on August 6, 2011 at 5:28 AM

Did they make a point of blaming the GOP? I asked this because I saw this from Megan MCardle:

For a couple of days, I’ve been hearing rumors that one reason that US stocks were plummeting was S&P’s delay in issuing its ratings; supposedly, the delay was because S&P was going to downgrade us, and they wanted to wait until after Friday’s market close.

Well, the rumors seem to be true. S&P is downgrading us. Apparently, their downgrade is going to contain some harsh and pointed words at Congressional Republicans.

Nonetheless, expect the GOP to attempt to spin this: either they will claim that this is “really” disappointment about our failure to make even deeper spending cuts, proving that they should have been even more intransigent . . . or they will attack S&P.

Well, frankly, I don’t blame Standard and Poor’s. And not because we didn’t make deeper cuts–we have lower debt loads and more favorable demographics than countries like France and the UK which still have their AAA. S&P is apparently telling us exactly what this is about: the frightening breakdown in our political system. Unless those reports turn out to be wrong, everything else is excuse-making.

Fixing our nation’s fiscal problems is going to be wildly unpopular. Either it will involve painful tax hikes, or it will involve unpleasant program cuts, and either way, the politicians that do it are going to get in trouble.

That means that in order to make a plausible deal, both parties are going to have to hold hands and jump together . . . and yes, that’s right, GOP, I mean compromise. I mean higher taxes. I don’t like it. But I also don’t see any way around it. Any party that tries a unilateral solution will simply be removed from office the next time around.

What the Republicans made abundantly clear was that this is very unlikely. And yes, the Democrats had their own role to play–both in starting this monstrous game of tit-for-tat that we’re now all trapped in (liberal pundits moaning about partisanship and norms seem to have wiped the name “Bork” from their consciousness), and in getting the progressive caucus to make tea-party like noises. Obama’s failure to embrace the report of his own deficit commission, Reid’s stupid decision to make the GOP vote on this so that he wouldn’t have to defend his party’s fiscal record . . . the list goes on.

Were they that specific in their blame? I wonder if this means tax hikes or at least some kind of revenue enhancement measures are inevitable? It sounds to me like they blamed the politicians more than anything or anyone else.

It is easy to blame the GOP..but if not for the huge buildup of debt in the first place..a lot of what happened in those negotiations would not have transpired.

Terrye on August 6, 2011 at 5:47 AM

I wonder if this means tax hikes or at least some kind of revenue enhancement measures are inevitable?

No. That would be Zero’s /w dream.

He ain’t all that. He’s SUB ZERO.

Opinionator on August 6, 2011 at 5:53 AM

A) Geithner needs to be fired immediately.

B) This should be the nail in The One’s re-election coffin.

JetBoy on August 6, 2011 at 5:25 AM

Yes, but I have a feeling that everyone is going to get to share in this blame. I don’t doubt for one minute that the GOP will be getting plenty of blame too..mostly for their refusal to raise taxes. Both parties will get blame for this. In fact, if what I have heard is right…the S&P went out of their way to blame both parties and the political brinkmanship involved in the recent debt deal negotiations. I would not be surprised if the Tea Party did not get blame for part of this as well.

What a mess. My God, the French have a triple A rating.

Terrye on August 6, 2011 at 5:54 AM

I wonder if this means tax hikes or at least some kind of revenue enhancement measures are inevitable?

No. That would be Zero’s /w dream.

He ain’t all that. He’s SUB ZERO.

Opinionator on August 6, 2011 at 5:53 AM

Maybe yes, maybe no..when we hear people talk about ethanol subsidies, they are actually referring to ethanol tax credits..there are a lot of tax credits like that out there in our tax code. They might just get rid of some tax credits or loopholes or deductions and actually lower rates for businesses in an effort to spur growth. That would make it possible to create more revenue without actually raising tax rates. If you see what I mean. I would not be surprised to see something like that. Apparently when S&P did this thing, they were not just complaining about spending, they were complaining about the political breakdown in dealing with overall debt. I am not sure that it matters to them how it is done..only that it is done.

Terrye on August 6, 2011 at 5:58 AM

In other words, the whole showdown over the debt limit actually helped lead to the downgrade, because it became more about politics and less about long term debt reduction. Or so says the folks at S&P who did not even see the meltdown coming.

Terrye on August 6, 2011 at 6:00 AM

Of course the S&P people saw the meltdown coming. Didn’t ALL of us in flyover, yahoo, teapartier country? What idiot DIDN’T see it coming?

Going to bed.

G’night now.

Oh, and Terrye? If you want to revise the tax code, eliminate it.

Go to a flat tax. But you must abolish the IRS’ other requirements. I.E., no taxes on top of the flat tax.

PERIOD.

Opinionator on August 6, 2011 at 6:16 AM

Oh, and Terrye? If you want to revise the tax code, eliminate it.

Go to a flat tax. But you must abolish the IRS’ other requirements. I.E., no taxes on top of the flat tax.

PERIOD.

Opinionator on August 6, 2011 at 6:16 AM

That might not be a bad idea to ge honest.

My point is that the Tea Party and the GOP will get the blame for this whether they deserve it or not…they already are. The story will be that their intransigence lead us to this place and Obama was not enough of a leader to stand up to them. Or something like that.

I am simply pointing out that in order to get out of this bad place we need to cut that debt and while it is obvious that cutting spending will have to happen, it might be that doing away with some credits and deductions could help as well. We have to do something to resolve this, it is too important to just play politics with.

Terrye on August 6, 2011 at 6:42 AM

Geithner: Resign or be fired.

petefrt on August 6, 2011 at 6:46 AM

I don’t doubt for one minute that the GOP will be getting plenty of blame too..mostly for their refusal to raise taxes.

This is true, Terrye…Checking out the lefty blogs/news, blame is going to the GOP for not taxing “the rich” enough. Heck, even The One is still blaming Bush for all our ills. Dear gawd, get him outta there.

JetBoy on August 6, 2011 at 7:00 AM

I don’t doubt for one minute that the GOP will be getting plenty of blame too..mostly for their refusal to raise taxes.

This is true, Terrye…Checking out the lefty blogs/news, blame is going to the GOP for not taxing “the rich” enough. Heck, even The One is still blaming Bush for all our ills. Dear gawd, get him outta there.

JetBoy on August 6, 2011 at 7:00 AM

Blaming Bush…what a tool. I think everyone is going to get some blame in this..but most of it belongs to Obama himself. No doubt about that.

Terrye on August 6, 2011 at 7:19 AM

The story will be that their intransigence lead us to this place and Obama was not enough of a leader to stand up to them. Or something like that.

I am simply pointing out that in order to get out of this bad place we need to cut that debt and while it is obvious that cutting spending will have to happen, it might be that doing away with some credits and deductions could help as well. We have to do something to resolve this, it is too

Terrye on August 6, 2011 at 6:42 AM

reminder: obama offered a grand bargain of $4 trillion in cuts, including entitlements, as well as revenue increases of about a $ trillion. republicans rejected it.

sesquipedalian on August 6, 2011 at 7:27 AM

Morning DS :)

cmsinaz on August 6, 2011 at 7:28 AM

Awww…I see we’ve made history again! Thanks, Resident Osbama!

DanaSmiles on August 6, 2011 at 7:36 AM

reminder: obama offered a grand bargain of $4 trillion in cuts, including entitlements, as well as revenue increases of about a $ trillion. republicans rejected it.

sesquipedalian on August 6, 2011 at 7:27 AM

yeah, and then he reconsidered and asked for more revenues…pls, no amount of revenues will ever be enough for these profligates on the left…they will just ask for more and more and more…according to them the choices are: the destruction of this country by taxing people and businesses into oblivion, or by spending like a drunk sailor and bringing the debt to unsustainable levels…
and I choose….yes, we can!….

jimver on August 6, 2011 at 7:41 AM

Awww…I see we’ve made history again! Thanks, Resident Osbama!

DanaSmiles on August 6, 2011 at 7:36 AM

never a dull moment with this occupant :)

jimver on August 6, 2011 at 7:42 AM

Instead of $900 billion in revenue, we could have had that and more in budget cuts by not raising the debt ceiling and having the government live within its means.

That spin of needing additional revenue is not even close to telling the whole story as it implies you keep spending like you currently are. If you kill the spending there is no need for additional revenue, and you then shed parts of government you can no longer fund. Getting rid of the Dept. of Agriculture and Education gets you very close to that $900 billion, alone. Revenue isn’t the only factor in this equation and the size, scope and cost of government must be in question to get to a state where we do not run up debt… at all. Once you live within your means you don’t need additional revenue because you have cut out the unnecessary stuff and demonstrate that you recognize you have a spending problem.

Those analysts and their supporters who spout this insanity are not showing the entire construct and implying that only taxes matter… yet it isn’t that we don’t take in enough to run a good sized Nation at $2 trillion per year, but that we spend way beyond that and no amount of revenue taken from a weak economy will change that or even change the direction of debt accumulation.

The GOP does not represent the values of thrift, frugality and living within your means. Neither do the Democrats. Yet when presented with the basics people can and will understand what needs to be done. And those basics will come through no matter what the spin is because the basics can’t be spun and they will not be denied. How math and economics works is cold, heartless, remorseless and will continue on no matter how nice or how evil you are: it takes anyone who ignores it just the same no matter what you espouse, what you spin, what you lie about, how much ‘good’ you think you can do, those do not matter and the basics will mete out their justice to all who cross them sooner or later.

We have defied the Gods of the Copybook Headings.

Their pain is meted out without fervor and without favor.

And they will continue to mete it out until we recognize just what our folly is that causes such pain. Once we stop so will they… and the pain will ease until some next fool wishes to cross them, again.

ajacksonian on August 6, 2011 at 7:45 AM

My point is that the Tea Party and the GOP will get the blame for this whether they deserve it or not…they already are. The story will be that their intransigence lead us to this place and Obama was not enough of a leader to stand up to them. Or something like that.

I am simply pointing out that in order to get out of this bad place we need to cut that debt and while it is obvious that cutting spending will have to happen, it might be that doing away with some credits and deductions could help as well. We have to do something to resolve this, it is too important to just play politics with.

Terrye on August 6, 2011 at 6:42 AM

RINOs like yourself will ALWAYS compromise yourself into a tight corner.

You start off by saying the Tea Party will get the blame alongside the GOP? How so? Did Boehner and the other Establishment hacks listen to us? Which part of the negotiated crappy debt deal did the Tea Party sign up to?

First Ryan proposed a budget – it was rejected for being too extreme. The Tea Party coalesced behind CCB as the sole condition for raising the debt limit. Dems and the GOP Establishment called us nuts and unrealistic.

We were told that unless the crappy deal negotiated by Boehner et al was passed, the markets would tank and we would be downgraded not to mention a default. The Tea Party countered that CCB was the only solution to preventing the owngrade and the markets tanking. We also said a default was not likely.

Now fast forward…

1. The default was always a lie – even the MSM is confessing this in mny articles.

2. The downgrade and markets tanking happened just as we predicted.

And we get the blame? What the heck? And your solution? More compromising to raise “revenues”?

TheRightMan on August 6, 2011 at 7:46 AM

Well, this is ugly. Monday’s gonna be one interesting day.

Failbama and his clown posse are flushing the country down the drain. Deliberately.

dogsoldier on August 6, 2011 at 8:07 AM

Rome.

Dr. ZhivBlago on August 6, 2011 at 2:41 AM

This.

That is all.

Grace_is_sufficient on August 6, 2011 at 8:14 AM

Wow … my wife turned on the Today show, and affirmative action nitwit Lester Holt apparently couldn’t find and lefties at NBC News, so he had Crazy Larry on from PMSNBC to blame the downgrade on Tea Party conservatives.

They are now cross-breeding Today with MSNBC. Mutants.

Jaibones on August 6, 2011 at 8:19 AM

This is true, Terrye…Checking out the lefty blogs/news, blame is going to the GOP for not taxing “the rich” enough. Heck, even The One is still blaming Bush for all our ills. Dear gawd, get him outta there.

JetBoy on August 6, 2011 at 7:00 AM

Yep, they’re gonna try, but it’s not gonna fly. The Left’s been spinnin’ Obama’s plates for so long, they’re certified acrobats by now…but that this has not happened on ANY other president’s watch is bound to hurt him more than he’s already hurting.

Watch for his approval ratings to sink below 40%. Soon.

Grace_is_sufficient on August 6, 2011 at 8:19 AM

My take.

kingsjester on August 6, 2011 at 8:30 AM

A grumpy White House points to S&P’s math error and calls it “amateur hour.”

For once they are, unarguably, speaking from expertise.

MarkT on August 6, 2011 at 8:31 AM

And obaka is still blaming the sunami in Japan….

ladyingray on August 6, 2011 at 8:40 AM

unbelievable, these polls…he’s still doing well…this is not possible!!! Wisconsin and Pa????…above the national average…what kind of people reside in those state…

– FL: 44% approve, 51% disapprove (Quinnipiac, 8/4)

— PA: 54% approve, 43% disapprove (Quinnipiac, 8/2)

— MI: 47% approve, 40% disapprove (EPIC-MRA, 7/18)

— WI: 50% approve, 44% disapprove (UW Badger poll, 7/14)

jimver on August 6, 2011 at 8:43 AM

Dan Mitchell weighs in…

visions on August 6, 2011 at 8:51 AM

jimver on August 6, 2011 at 8:43 AM

We’re all familiar with the colloquialism “sucking hind teat”. In the case of PA and WI, they have a permanent reservation at foremost teat.

They know who butters their bread.

BobMbx on August 6, 2011 at 8:53 AM

Look: the United States has been running up big debts for the past couple of years because we’re trying to climb out of an epic recession. That’s perfectly justifiable.

ahhh NO it’s not, you jackass!

tx2654 on August 6, 2011 at 8:57 AM

We also learned on Friday that Sec. Geithner will remain in his position til the end of Zero’s 4 years in ofc. The only way to get rid of him is to get rid of his boss. We need to clean house next Nov ’12 and get rid of the whole bunch.

Kissmygrits on August 6, 2011 at 9:03 AM

Wow! Well, you can’t say that Obama didn’t keep his campaign promise to “fundamentally transform America” . . . from the USA to Spain and with a negative financial outlook to boot! Another unprecedented “notch” in the pistol of our historic socialist totus-readin’, hoops-lovin’, Nicorette-gnashin’ Prez! My SEP-IRA is on a Slim-Fast diet.

tpitman on August 6, 2011 at 9:19 AM

Watch for his approval ratings to sink below 40%. Soon.

Grace_is_sufficient on August 6, 2011 at 8:19 AM

I did believe the bill to raise the debt ceiling was going to give Obama enough rope to hang himself with, which is what I hope is happening with the news of this downgrade. But what I was afraid of has also happened, in that the country is being damaged futher still. I did believe the Republicans did the right thing with passing that bill. Now I think I may have been shnookered into believing that it would avert some big catastrophe. Well, this isn’t looking so pretty either.

lynncgb on August 6, 2011 at 9:22 AM

How about:

Bond Ratings B+
Obama’s job rating F-

MaiDee on August 6, 2011 at 9:31 AM

Watch for his approval ratings to sink below 40%. Soon.

Grace_is_sufficient on August 6, 2011 at 8:19 AM

I believe it’s already below 40%, but that 40% number has become a critical threshold, and the liberal pollsters will not allow little Bammie’s popularity to fall below that number. Little Bammie would be in President George W. Bush territory if it did. They will fiddle with the weighting as much as required.

Conservatives enable that corruption too, by reading their phony polls and not simply discarding them. What reason do they have to get honest?

slickwillie2001 on August 6, 2011 at 9:47 AM

This downgrade was the only fair thing to do.

If it is based on a math error, I’m sure that in no time, they can borrow and spend their way there, unless they take it as a warning, a “wakeup call”, but we all know they won’t.

“Eventually, Socialists run out of other peoples’ money”Margaret Thatcher
“Time has come today”The Chambers Brothers

J_Crater on August 6, 2011 at 9:49 AM

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