Political Buzz Debt Ceiling Showdown August 6, 2011: Washington Post Analysis — The Reasoning Behind the Republican Showdown in the Debt Crisis — “Origins of the Debt Showdown”

POLITICAL BUZZ

OBAMA PRESIDENCY & THE 112TH CONGRESS:

FEATURES:

For the GOP, the debt showdown was a ‘leverage moment’:

Source: WaPo, 8-7-11

Origins of the debt showdown

The frantic showdown over the debt ceiling that played out in Washington, bringing the nation to the brink of default, looked like the haphazard escalation of a typical partisan standoff. It wasn’t.

Rather, it was the natural outgrowth of a years-long effort by GOP recruiters to build a new majority and reverse the party’s fortunes. That effort began before the economy collapsed in 2008, before the government bailouts that followed, before the tea party rose in response to push its anti-tax, anti-spending message.

The Washington Post reconstructs the Republican party’s transformation, and its impact on the nation’s economic course, through interviews with the leading participants during this summer’s drama and from earlier interviews, some of them recorded, at various points during the past 2 1/2 years….READ MORE

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Full Text US Economy in Crisis August 6, 2011: President Barack Obama’s Weekly Address Discusses the Economy

POLITICAL SPEECHES & DOCUMENTS

OBAMA PRESIDENCY & THE 112TH CONGRESS:

QUOTES

President Barack Obama tapes his Weekly Address
White House Photo, Samantha Appleton, 8/5/11

 

Weekly Address: Getting the Economy Growing Faster

Source: WH, 8-6-11

President Obama outlines a number of steps that can be taken right away to create jobs and help grow the economy.

 

Transcript | Download mp4 | Download mp3

WEEKLY ADDRESS: Creating Jobs and Getting All Americans Back to Work

WASHINGTON—In this week’s address, President Obama called on Democrats and Republicans to work together to grow the economy and get Americans back to work.  The President has outlined a number of steps Congress can take right now to spur growth and create jobs, including extending tax cuts for working and middle class families, cutting red tape to encourage new businesses to grow and hire, passing trade deals that will support tens of thousands of jobs, and giving our out-of-work construction workers opportunities to rebuild our nation’s infrastructure.

Remarks of President Barack Obama
Weekly Address
Saturday, August 6, 2011
Washington, DC

This week, Congress reached an agreement that’s going to allow us to make some progress in reducing our nation’s budget deficit.  And through this compromise, both parties are going to have to work together on a larger plan to get our nation’s finances in order.  That’s important. We’ve got to make sure that Washington lives within its means, just like families do.  In the long term, the health of our economy depends on it.

But in the short term, our urgent mission has to be getting this economy growing faster and creating jobs.  That’s what’s on people’s minds; that’s what matters to families in this country.  And the fact is, this has been a tumultuous year for the economy.  We’ve weathered the Arab Spring’s effect on oil and gas prices.  The Japanese earthquake and tsunami’s effect on supply chains.  The economic situation in Europe.  And in Washington, there was a contentious debate over our nation’s budget that nearly dragged our country into financial crisis.

So our job right now has to be doing whatever we can to help folks find work; to help create the climate where a business can put up that job listing; where incomes are rising again for people. We’ve got to rebuild this economy and the sense of security that middle class has felt slipping away for years.  And while deficit reduction has to be part of our economic strategy, it’s not the only thing we have to do.

We need Democrats and Republicans to work together to help grow this economy.  We’ve got to put politics aside to get some things done.  That’s what the American people expect of us.  And there are a number of steps that Congress can take right away, when they return in September.

We need to extend tax cuts for working and middle class families so you have more money in your paychecks next year.  That would help millions of people to make ends meet.  And that extra money for expenses means businesses will have more customers, and will be in a better position to hire.

Yesterday, I proposed a new tax credit for companies that hire veterans who are looking for work after serving their country.  We’ve got a lot of honorable and skilled people returning from Iraq and Afghanistan, and companies that could benefit from their abilities. Let’s put them together.

We need to make sure that millions of workers who are still pounding the pavement looking for jobs are not denied unemployment benefits to carry them through hard times.

We’ve got to cut the red tape that stops too many inventors and entrepreneurs from quickly turning new ideas into thriving businesses – which holds back our whole economy.

It’s time Congress finally passed a set of trade deals that would help displaced workers looking for new jobs, and that would allow our businesses to sell more products in countries in Asia and South America – products stamped with three words: Made in America.

And we ought to give more opportunities to all those construction workers who lost their jobs when the housing boom went bust.  We could put them to work right now, by giving loans to companies that want to repair our roads and bridges and airports, helping to rebuild America.

Those are a few commonsense steps that would help the economy.  And these are ideas that have been supported by both Democrats and Republicans in the past.  So I’m going to keep calling on both parties in Congress to put aside their differences and send these bills to my desk so I can sign them right away.  After all, both parties share power.  Both parties share responsibility for our progress.  Moving our economy and our country forward is not a Democratic or a Republican responsibility; it is our responsibility as Americans.

That’s the spirit we need in Washington right now. That’s how we’ll get this economy growing faster and reach a brighter day.

Thanks for listening, and have a great weekend.

Full Text US Economy in Crisis August 6, 2011: Republican GOP Candidates React to S&P’s Downgrade of US Credit Rating from AAA to AA+

POLITICAL SPEECHES & DOCUMENTS

OBAMA PRESIDENCY & THE 112TH CONGRESS:

QUOTES

GOP candidates react to credit rating downgrade

Source: USA Today, 8-6-11
JON HUNTSMAN

“Out-of-control spending and a lack of leadership in Washington have resulted in President Obama presiding over the first downgrade of the United States credit rating in our history.

“For far too long we have let reckless government spending go unchecked and the cancerous debt afflicting our nation has spread.

“We need new leadership in Washington committed to fiscal responsibility, a balanced budget, and job-friendly policies to get America working again.”

MICHELE BACHMANN

“Tonight’s decision by S&P to downgrade our credit rating to AA+ is a historically significant and serious event for the United States. The United States has had a AAA credit rating since 1917.

“That rating has endured the great depression, World War II, Korea, Vietnam and the terrorist attacks on 9/11. This president has destroyed the credit rating of the United States through his failed economic policies and his inability to control government spending by raising the debt ceiling.

“We were warned by all of the credit agencies that a failure to deal with our debt would lead to a downgrade in our credit rating, but instead he submitted a budget that had a $1.5 trillion deficit and then requested a $2.4 trillion blank check. President Obama is destroying the foundations of the U.S. economy one beam at a time.

“I call on the president to seek the immediate resignation of Treasury Secretary Timothy Geithner and to submit a plan with list of cuts to balance the budget this year, turn our economy around and put Americans back to work.”

NEWT GINGRICH

“The Obama disaster continues,” he said in a Twitter message at 8:54 p.m. “Highest food stamp level and lowest credit rating in history in the same 24 hours.”

MITT ROMNEY

“America’s creditworthiness just became the latest casualty in President Obama’s failed record of leadership on the economy.

“Standard & Poor’s rating downgrade is a deeply troubling indicator of our country’s decline under President Obama.

“His failed policies have led to high unemployment, skyrocketing deficits, and now, the unprecedented loss of our nation’s prized AAA credit rating. Today, President Obama promised that ‘things will get better.’

“But it has become increasingly clear that the only way things will get better is with new leadership in the White House.”

HERMAN CAIN

“On Tuesday, April 19, 2011, Treasury Secretary Tim Geithner promised that America faced ‘no risk’ of a credit downgrading. Less than six months later, he is proven shamefully wrong. As I have feared for months, the S&P has chosen to downgrade America’s credit rating from AAA, which we have always enjoyed, to AA+.

“Perhaps this is because the Obama Administration and Congressional Democrats never once demonstrated a willingness to propose its own ideas for meaningful spending cuts, something credit agencies signaled were necessary to redeem America’s financial standing in the world.

“As a corporate executive, I’ve rescued companies from the brink of bankruptcy and returned them to profitability. That involved balancing budgets or even creating them in the first place, something that the Democratic leadership in Congress hasn’t done for 828 days. If I couldn’t run companies without budgets, how can the government?

“I also had to make tough budgetary cuts to save companies. Leadership is about doing what’s right, even when it’s difficult. But somehow, that sort of idea was never floated among those within the Obama Administration.

“Now, Americans are fearful for their retirements and for their children’s educational savings. This is a country known for dreamers and innovators, for thinkers and doers. And now, we are a nation living in fear.

“This is a sad day for America. Such a rating is unfitting of the greatest and most prosperous nation the world has ever known. And such a weak leader is, as well.”

RON PAUL

“We have just learned that for the first time in our history, the United States’ top credit rating has been downgraded by credit rating agency S&P.

“We were told by proponents of increasing the debt ceiling that a credit downgrade would come if we didn’t raise the limit, but the opposite was true.

“The ratings agencies had been warning us for some time that it is imperative upon the U.S. government to get its fiscal house in order and tackle its debt and deficit problem by taking serious steps.

“Unfortunately, the game in Washington has been one of partisan blaming and bipartisan out-of-control spending.

“America has been dealing with this severe economic crisis for years because the Washington establishment failed to focus on the true issues at hand: a declining dollar and out-of-control spending.

“Last November, millions of frustrated Americans let it be known that they wanted our debt crisis solved and our spending problem to end. They sent a group of new lawmakers to Washington to end business as usual.

“But the old crowd of elites still refuses to budge on doing everything it takes to get us out of this hole they’ve dug. Instead of real substantial budget cuts, we get minor or ‘fake’ cuts and budget tricks that may or may not happen far off into the future. We get a Congress that abdicates its responsibility to an unconstitutional ‘Super Congress’ with the power to make things worse than they already are.

“The American people realize that our nation can no longer afford to stay on this same path of reckless spending and follow the status quo of Washington. They will not tolerate any further ineffective stimulus schemes that do nothing to help our economy and actually do the opposite to the tune of trillions of dollars in money being spent and printed, and millions of people remaining unemployed and without much economic stability or security.

“If Washington refuses to take heed, there is little cause for optimism.

“Growing inflation, rising gasoline and food prices, and trillion-dollar budget deficits will all soon seem like minor issues if our nation does not immediately change our monetary and spending policies.

“We must take bold actions to reduce out-of-control government spending, and get the federal government out of the way of small business and entrepreneurs so that they can start hiring again.

“If elected President, I pledge to veto any unbalanced budget and to balance the federal budget in the first year of my term. I will fight to reduce taxes and remove unconstitutional regulations so that businesses can hire, Americans can get back to work, and our economy can truly recover.”

RICK SANTORUM

“If this downgrade holds, then it’s another example in a long line of examples of the President’s failure of leadership. Is anyone surprised at this point? There are 14 million people out of work and looking to the White House for answers – but they are receiving nothing but a blank stare.

“The markets are scared and the credit downgrade has happened because the President and this Congress continue to address the symptoms and not the disease.

“This nation is spending more money than it takes in and the world knows it – now, it’s time to show the world that the United States has the fortitude and resolve to pass a Balanced Budget Amendment to stop out of control spending and shrink the scope of government once and for all. The deal the President cut with Congress was supposed to avoid this downgrade but all it did was once again kick the can down the road.

“President Obama and his Administration have been a failure.

“I understand the US Treasury is going back to Standard and Poors to say that a two trillion dollar mathematical error by S&P contributed to the downgrade. So, in addition to blaming President Bush for all of its problems, now the White House is blaming S&P – but this happened on the President’s watch – and he has to deal with it. I guess President Obama is left to cling to the ‘hope’ that a mathematical error caused this. Is that the “hope” the President was talking about?

“Folks, an AA rating should be so far in our rear view mirror that no mathematical error should affect it.

“Tonight, I’m saddened for the millions out of work – but I’m hopeful that I will replace Barack Obama as President and get this country and its economy moving again.”

TIM PAWLENTY

“This is a sad moment for the United States, but it’s a reflection that our country is in trouble. President Obama is inept when it comes to creating the conditions or job creation and economic growth. It’s time for a new direction and a new President.”

“The S&P downgrade blemishes our free Republic’s revolutionary experiment in liberty and self-government; consequently, it heartens tyrants and terrorists.

THADDEUS MCCOTTER

“We must reject recriminations, and unite to squarely face and fully conquer the fiscal challenge that threatens our prosperity and security.

“For as this downgrade underscores, only by restructuring big government into citizen-government will we keep our nation the world’s leading economy and affirm American exceptionalism throughout the 21st Century.”

Political Buzz US Economy in Crisis, August 6, 2011: S&P (Standard & Poor’s) Downgrades United States Credit Rating from Coveted AAA to AA+ Friday After Debt Bill & Repeated Warnings — US has Maintained AAA Rating since 1917

POLITICAL BUZZ

By Bonnie K. Goodman

Ms. Goodman is the Editor of History Musings. She has a BA in History & Art History & a Masters in Library and Information Studies from McGill University, and has done graduate work in history at Concordia University.

OBAMA PRESIDENCY & THE 112TH CONGRESS:

S&P rating downgrade

These 15 countries (and the Isle of Man) have the world’s highest credit rating, AAA from both Moody’s and Standard & Poor’s. The U.S. lost that high standing Friday, when S&P downgraded it to a AA+ rating. (Note: New Zealand has also been downgraded from AAA to AA)

THE HEADLINES….

S&P downgrades U.S. credit rating: The United States credit rating was downgraded for the first time Friday night, after a bipartisan debt deal signed into law this week failed to assuage concerns about the nation’s growing spending, according to a person familiar with the matter.
Standard & Poor’s said it was reducing the U.S. credit rating from AAA to AA for the first time since it began assigning grades to countries in 1941. The credit rating agency warned several times this year that unless the government took steps to tame its debt, it could face a downgrade.

U.S. Long-Term Debt Downgraded by Standard & Poor’s: Standard & Poor’s removed the United States government from its list of risk-free borrowers on Friday night, citing concern about the rising burden of long-term federal debt.
The ratings agency had threatened the downgrade if the government did not act to reduce the federal debt by at least $4 trillion over the next decade. Earlier this week, Congress instead passed a plan to reduce the debt by at least $2.1 trillion.
Two other ratings agencies, Moody’s and Fitch, both have said that they have no immediate plan to downgrade the country’s credit rating, giving the government more time to make progress on debt reduction. The split verdict limits the impact of the S.&P. downgrade as many consequences would only be triggered by a reduction by at least two agencies.

“The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics.” — S&P

“The political brinkmanship 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.”… – S&P

“The dysfunctional status of Washington has resulted in the first ever downgrade of the credit rating of the United States’ debt by Standard and Poor’s. Only time will tell whether this will have an adverse effect on prevailing interest rates paid on new U.S debt. If it does, it will only serve to compound our current economic challenges and longer-term fiscal outlook.” — Former Comptroller General David Walker.

“The action by S&P reaffirms the need for a balanced approach to deficit reduction that combines spending cuts with revenue-raising measures like closing taxpayer-funded giveaways to billionaires, oil companies and corporate jet owners. This makes the work of the joint committee all the more important, and shows why leaders should appoint members who will approach the committee’s work with an open mind — instead of hardliners who have already ruled out the balanced approach that the markets and rating agencies like S&P are demanding.” — Senate Majority Leader Harry Reid.

“This is a wake-up call for Washington to get serious about fixing our debt problem. Many of us have long argued that Congress must make the hard choices to address this issue immediately, and I can only hope this helps others in Washington and around the country understand our urgency. Substantial, meaningful reform that results in a pro-growth tax system, entitlement reforms and spending reductions must be implemented as soon as possible.” — Republican Sen. Chris Chambliss of Georgia.

“The deal Congress just passed over conservative objections has already had its obvious effect, the loss of America’s credibility around the world. The deal was not a serious attempt to solve our spending and debt problem, it was a political solution meant to kick the can down the road. The only real solution to our spending and debt crisis was Cut, Cap & Balance that the president rejected out of hand.” — Republican Sen. Jim DeMint of South Carolina.

“As S&P stated, ‘The transparency and accountability of institutions bear directly on sovereign creditworthiness because they reinforce the stability and predictability both of political institutions and the political framework.’ The American people are watching to see if the bipartisan Joint Committee will develop a plan to responsibly reduce the deficit in a balanced way while promoting economic growth and creating jobs.” — House Democratic leader Nancy Pelosi.

“Tonight’s decision by S&P to downgrade our credit rating to AA+ is a historically significant and serious event for the United States. The United States has had a AAA credit rating since 1917. That rating has endured the great depression, World War II, Korea, Vietnam and the terrorist attacks on 9/11. This president has destroyed the credit rating of the United States through his failed economic policies and his inability to control government spending by raising the debt ceiling.” — GOP presidential candidate Michelle Bachmann, a Minnesota congresswoman.

“America’s creditworthiness just became the latest casualty in President Obama’s failed record of leadership on the economy. Standard & Poor’s rating downgrade is a deeply troubling indicator of our country’s decline under President Obama. His failed policies have led to high unemployment, skyrocketing deficits, and now, the unprecedented loss of our nation’s prized AAA credit rating.” — GOP presidential candidate Mitt Romney, former Massachusetts governor.

    • GOP candidates react to credit rating downgrade: Standard & Poor’s, a major investment consulting agency, downgraded the United States from its top status on Friday night, saying that the dependability of US policy making had reached a significant low. … – USA Today, 7-29-11

AAA to AA+: Here come the battery jokes! — CNN Money, 8-6-11

“They’ve changed the US from AAA to AA. All this time and they didn’t realise they were using the wrong batteries.”…
“Until today I didn’t even know America ran on batteries, never mind what size.”…
“Until today I didn’t even know America ran on batteries, never mind what size.”…
“Caught a just downgraded AA+ 11-inch Maine bass. Gotta cross to Canada across lake for AAA fish!” — Economist Nouriel Roubini

    • Ouch! U.S. booted from Triple-A debt club CNN Money, 8-6-11
    • Barack Obama under fire as blame game follows US credit downgrade: Left and right turn on president, raising questions over his chances of winning the White House again… – Guardian, UK, 8-6-11
    • S&P downgrades US credit rating from AAA: The United States has lost its coveted top AAA credit rating. Credit rating agency Standard & Poor’s on Friday downgraded the nation’s rating for the first time since the U.S. won the top ranking in 1917. The move came after Congress haggled over budget cuts and the nation’s borrowing limit — and failed to cut enough government spending to satisfy S&P. The issue has contributed to convulsions in financial markets.
      The drop in the rating by one notch to AA-plus was expected. The three main credit agencies, which also include Moody’s Investor Service and Fitch, had warned during the budget fight that if Congress did not cut spending far enough, the country faced a downgrade. S&P said that it is making the move because the deficit reduction plan passed by Congress on Tuesday did not go far enough to stabilize the country’s debt situation. Moody’s said Friday it was keeping its AAA rating on the nation’s debt, but that it might still lower it…. – AP, 8-5-11
    • U.S. sources: S&P focused too much on debt-limit politics: Standard & Poor’s focused too much on the messy political process leading to a debt-limit hike and made a $2-trillion error in its calculations about U.S. finances, sources familiar with the discussions claimed on Friday night.
      The error was centered in the ratings agency’s estimates of discretionary spending and was pointed out by Treasury and it raised questions about S&P’s credibility, the sources said…. – Reuters, 8-5-11
    • S& P’s Analysis Was Flawed by $2 Trillion Error, Treasury Says: The Standard & Poor’s decision to downgrade the U.S. credit rating was flawed by a $2 trillion error, according to a Treasury Department spokesman.
      S& P lowered the nation’s AAA credit rating one level to AA+ yesterday, after warning on July 14 that it would reduce the ranking in the absence of a “credible” plan to lower deficits even if the nation’s $14.3 trillion debt limit were lifted. The outlook was kept as “negative.”
      The ratings company said that the deficit-cutting plan signed by President Barack Obama this week after months of wrangling with Congress falls short of what “would be necessary to stabilize the government’s medium-term debt dynamics.”
      The Treasury disagreed with S& P’s assessment and judged the analysis was carried out hastily, said a person familiar with the matter who declined to be identified because the discussions were private.
      The ratings firm erred in estimating discretionary spending levels at $2 trillion higher than what the Congressional Budget Office estimates, the person said…. – Bloomberg, 8-5-11
    • Obama briefed on S&P downgrade before leaving White House: President Barack Obama was briefed in advance on Friday on Standard & Poor’s intention to downgrade the United States’ top-notch AAA credit rating and has continued receiving updates from top aides, an administration official said.
      Obama left the White House for the Camp David presidential retreat outside Washington in late afternoon just hours before S&P’s announcement. “He was briefed before he left for Camp David and has been receiving updates through the night,” the official said…. – Reuters, 8-6-11
    • US loses AAA rating for first time: Standard & Poor’s has cut the US credit rating for the first time in history, saying the country’s politicians are increasingly unable to come to grips with its massive fiscal deficit and debt load.
      S&P cut the US rating from its top-flight triple-A one notch to AA+, and added a negative outlook to it, saying there was a chance it could be downgraded again within two years if progress is not made cutting the huge government budget gap. amp; It was the first time the US was downgraded since it received an AAA rating from Moody’s in 1917; it has held the S&P rating since 1941…. – AFP, 8-5-11
    • S&P Strips U.S. of Top Credit Rating: Unprecedented Downgrade Comes After Last-Minute Standoff; Treasury Says Decision Is ‘Flawed by a $2 Trillion Error’
      A cornerstone of the global financial system was shaken Friday when officials at ratings firm Standard & Poor’s said U.S. Treasury debt no longer deserved to be considered among the safest investments in the world.
      S&P removed for the first time the triple-A rating the U.S. has held for 70 years, saying the budget deal recently brokered in Washington didn’t do enough to address the gloomy long-term picture for America’s finances. It downgraded U.S. debt to AA+, a score that ranks below Liechtenstein and more than a dozen other countries, and on par with Belgium and New Zealand.
      The unprecedented move came after several hours of high-stakes drama. It began in the morning, when word leaked that a downgrade was imminent and stocks tumbled. Around 1:30 p.m., S&P officials notified the Treasury Department that they planned to downgrade U.S. debt and presented the government with their findings. Treasury officials noticed a $2 trillion error in S&P’s math that delayed an announcement for several hours. S&P officials decided to move ahead anyway, and after 8 p.m. they made their downgrade official…. – WSJ, 8-5-11
    • S& P downgrades U.S. credit rating for first time: Standard & Poor’s announced Friday night that it has downgraded the United States credit rating for the first time, dealing a huge symbolic blow to the world’s economic superpower in what was a sharply worded critique of the American political system.
      Lowering the nation’s rating one-notch below AAA, the credit rating company said “political brinkmanship” in the debate over the debt had made the U.S. government’s ability to manage its finances “less stable, less effective and less predictable.” It said the bi-partisan agreement reached this week to find $2.1 trillion in budget savings “fell short” of what was necessary to tame the nation’s debt over time and predicted that leaders would have no luck achieving more savings later on.
      The decision came after a day of furious back-and-forth between the Obama administration and S&P. Government officials fought back hard, arguing that S&P made a flawed analysis of the potential for political agreement and had mathematical errors in its initial analysis, which was submitted to the Treasury earlier in the day. The analysis overstated the U.S. deficit over 10 years by $2 trillion. “A judgment flawed by a $2 trillion error speaks for itself,” a Treasury spokesperson said Friday…. – WaPo, 8-5-11
    • S&P Cuts US Credit Rating For First Time In Modern History: Standard & Poor’s took the unprecedented step of downgrading the U.S. government’s “AAA” sovereign credit rating Friday in a move that could send shock waves through global financial markets and potentially undermine world economic growth.
      In a press release, S&P, cut its top-notch long-term credit rating for the U.S. Treasury’s debt to AA+ with a negative outlook. It is the first time in modern history that one of the three main ratings firms has stripped the U.S. of its coveted AAA rating.
      S&P warned last month that if the U.S. government didn’t approve a credible medium-term plan to shrink its fiscal shortfall, it would downgrade the rating even if Congress approved a debt deal that raised the Treasury’s borrowing limit. On Tuesday, just in time for a deadline to avoid default, U.S. lawmakers passed a bill increasing the U.S. debt ceiling by $2.1 trillion. However, the amount of planned quid- pro-quo deficit cuts ran to $2.4 trillion, well short of the $4 trillion that S&P had suggested was needed to put the nation’s fiscal house in order.
      Some market participants have warned that the tepid pace of economic recovery means that even deeper fiscal cuts may be needed to reduce the share of public debt to U.S. gross domestic product, a closely watched gauge of a nation’s fiscal health…. – WSJ, 8-5-11
    • S&P downgrades U.S. credit rating: The agency says the level of cuts in the debt ceiling compromise ‘falls short’ and that intense partisanship in Washington hurts prospects for a solution.
      Standard & Poor’s downgraded the U.S. government’s credit rating Friday for the first time in history, saying the recent plan worked out to raise the federal debt ceiling “falls short” of what’s needed to stabilize the nation’s longer-term finances.
      The credit rating agency also said the partisan stalemate that put the U.S. on the brink of default this week did not bode well for efforts to reduce the nation’s soaring debt…. – LAT, 8-6-11

“On one hand, there is a case to be made that the madness of the right has made America a fundamentally unsound nation. And yes, it is the madness of the right: if not for the extremism of anti-tax Republicans, we would have no trouble reaching an agreement that would ensure long-run solvency,” he said, referring to protracted negotiations on the US debt ceiling in which conservative Republicans insisted on deep budget cuts.
“it’s hard to think of anyone less qualified to pass judgment on America than the rating agencies. The people who rated subprime-backed securities are now declaring that they are the judges of fiscal policy? Really?” — Liberal economist Paul Krugman, a Nobel Prize winner, in the New York Times

    • US media concerned over rating downgrade: US commentators have expressed concern on Standard & Poor’s decision to cut the US credit rating, with some blaming the setback on conservative Republicans…. – AP, 8-6-11

“No risk,” Timothy Geithner told Fox Business at the time. When asked whether S&P was wrong and that the U.S. would keep its top credit rating, Geithner said, “Absolutely”

    • Republicans Want Geithner to Walk The Plank After Credit Downgrade: With the U.S. losing its Triple-A credit rating for the first time ever, Republican lawmakers and presidential contenders are calling on President Obama to fire Treasury Secretary Timothy Geithner. Fox News, 8-6-11
    • After Downgrade, Debt Panel May Be Congress’s First Test: Friday’s downgrade of U.S. government debt raises pressure on a special “super committee” that lawmakers formed this week to try—once again—to reach a far-reaching budget deal. How Washington’s political culture responds to that charge could be one of the more important repercussions of the downgrade, outside the reactions of financial markets. And the special debt committee stands as the capital’s first test: Will lawmakers and the administration redouble their efforts to reach a broad budget-cutting deal or again descend into squabbles?… – WSJ, 8-6-11
    • S&P downgrade of US credit rating sends clear message to Congress: shape up: S&P, one of the three major credit-rating firms, downgraded its rating for US debt Friday night – a move that has the potential to further sppok global markets and drive up borrowing costs in the US. The reason for the downgrade, S&P said, was congressional dysfunction…. – CS Monitor, 8-6-11

“Americans expect to be No. 1 at everything… a great insult and humiliating to the country…. If this brings rising interest rates on credit cards and mortgages, it is going to send a political shockwave throughout the system, and there will definitely be a ‘throw-the-bums-out’ mentality.” — Republican strategist Ron Bonjean.

“Most people understand the inability to satisfy the bond-ratings agencies was not Obama’s alone… Congress gets much more than half of the blame for this. Blame generally falls on the president when something like this happens.” — Ross Baker, a political scientist at Rutgers University in New Brunswick, New Jersey

  • S&P Downgrade May Cloud Obama Re-Election Bid Even as It Damages Congress: The downgrade of the U.S.’s AAA credit rating by Standard &’ Poor’s darkens President Barack Obama’s re-election chances while also damaging members of Congress from both parties as they prepare for the 2012 campaign, political analysts said.
    With Obama’s job-approval rating at 48 percent and an all- time high of 82 percent of Americans giving Congress negative marks in a New York Times/CBS News Poll taken this week, the downgrade will hurt the president and lawmakers by fueling economic uncertainty, possibly raising interest rates and wounding national pride, analysts said.
    S&P’s move deals a blow to Obama’s political standing by giving Republican presidential candidates the chance to attack him for being the first U.S. president to preside over a downgrade, said Ross Baker, a political scientist at Rutgers University in New Brunswick, New Jersey…. Bloomberg, 8-6-11
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