This will be absolutely devastating. Even though we know these draconian cuts will not heal the economy but will actually make things worse (all you have to do is look at the results from similar measures in the UK and Europe), you have to wonder about our so-called leaders and their fervent faith in the same economic voodoo that has never worked to date.
Because with the same cast of characters, I think we can assume the same kind of outcome. At most, I expect the closing of some small tax loopholes that will count as “revenue” — and the rest will be taken out of the hides of the most vulnerable.
Moral of the tale: When a corrupt rating agency says, “Gee, I notice you haven’t cut Medicare all that much,” the craven politicians respond, “How much would you like me to cut, sir?”
WASHINGTON — The downgrade of the United States government’s credit rating by Standard & Poor’s is almost sure to increase pressure on a new Congressional “supercommittee” to mute ideological disagreements and recommend a package of deficit-reduction measures far exceeding its original goal of at least $1.5 trillion, lawmakers said Sunday.
Even before the panel is appointed, its mission is expanding. Its role is not just to cut the annual budget deficit and slow the explosive growth of federal debt but also to appease the markets and help restore the United States’ top credit rating of AAA. Otherwise, taxpayers may eventually have to pay more in interest for every dollar borrowed by the Treasury.
The report certainly got the attention of Capitol Hill. “I think this is one of the most telling, important moments in our country’s history right now,” Senator John Kerry, Democrat of Massachusetts, said Sunday on the NBC program “Meet the Press.” He added: “This poses a set of choices not just about a recession. It’s about a financial crisis and the structure of our economy, which really has been misallocating capital.”
In the S.&P. report on Friday outlining the reasons for removing long-term Treasury debt from its list of nearly risk-free investments, the company cited doubts about the ability of the two political parties to bridge their gulf on fiscal policy.
Credit rating agencies have thus emerged as a powerful constituency whose concerns are taken seriously by Congress.
[…] S.&P. did not advocate a specific mix of increased revenue and spending cuts. But it did say that overhauling entitlement programs was “key to long-term fiscal sustainability” and that the debt deal “envisions only minor policy changes on Medicare.”
Oh, if only we had real leaders in our political establishment. And if only pigs had wings, they could fly.
Credit rating agencies have thus emerged as a powerful constituency whose concerns are taken seriously by Congress.
i love that quote! as if congress doesn’t already have a constituency, i.e. their constituents! when will they take their concerns seriously?
I think Ian Welsh captures the “meaning” of the S&P downgrade very well, including this:
The whole thing is worth reading.
I’m not convinced that the White House didn’t ask them to do it so they could rationalize being “forced” to cut Social Security and Medicare.
Also possible, susie. I think with this crew you can never be cynical enough.
Its all the same group of people who have two goals: to extract as much money as possible for themselves out of the economy and to crush the morale of the American people so that they can be pressured into low wage jobs where they can be exploited and their political power and unity broken.
The Tea Party politicians are the tool of this group on the inside, and the banks and the rating agencies are the tool on the outside to apply pressure in a pincer movement. And our president thinks he is the president of the markets, not the president of the people, so any counter pressure is negated. We’re not screwed; we’re actually pinched.
@3 Susie — Exact thoughts I’ve been having. Since Obama loves closed door secret deals, did he perhaps 1) make a deal with the Repubs in December that they could have the Bush Tax Cuts extended and all he would get was a one time extension of unemployment insurance (but not for anyone over 99 weeks) AND the R’s back him up in creating a “crisis” out of raising the debt ceiling so that he could get another entitlements cutting committee.
I figure he did not think the Tea Partiers would be quite so intransigent, however. That resulted in cutting things awfully close. And if he didn’t have a deal with S&P, that may have pushed them to lower the rating….
Or, maybe he even set up a deal with S&P to get this slightly lower rating to make sure he’d get his deficit hawk Dems on the Committee of the Twelve Caesars. He’d also have more clout to force cuts to entitlements through this little Politburo.
Today he did use comments by S&P to ask for bipartisan Austerianism from the Politburo. People must “come together,” work “as a team as the Navy Seals do.”
No mention of shared sacrifice, but I think the reference to the Seals makes the sacrifice required pretty explicit.