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EDITOR OF REDSTATE

Barack Obama Is Directly To Blame For the S&P Downgrade

If you have been away for the past twenty-four hours, you missed that for the first time since its founding in 1941, Standards and Poor downgraded our nation’s credit outlook. S&P believes there is a 33% change it will downgrade the nation’s AAA credit rating in the next two years.

For the past year, Democrats have spent freely arguing that their free spending ways did not matter. In fact, Barack Obama’s proposed budget for 2012 increases the national debt to 116% of gross domestic product, even while adding $2 trillion in tax increases.

It is not that budget proposal that became the straw to break the camel’s back.

It was not even his trillion dollar stimulus plan or his multi-trillion dollar stimulus plan than became the straw to break the camel’s back.

In fact, it was Barack Obama’s disastrous speech last week that broke the camel’s back.

As James Pethokoukis noted, Obama’s muddled plan to solve the crisis was “fastened together by the chewing gum and sticky tape of rosy economic assumptions and fiscal opacity.” But more so, it was Barack Obama’s angry words and denunciation of Paul Ryan‘s own plan that drove S&P to its conclusion.

S&P said

We view President Obama’s and Congressman Ryan’s proposals as the starting point of a process aimed at broader engagement, which could result in substantial and lasting U.S. government fiscal consolidation. That said, we see the path to agreement as challenging because the gap between the parties remains wide. We believe there is a significant risk that Congressional negotiations could result in no agreement on a medium-term fiscal strategy until after the fall 2012 Congressional and Presidential elections. If so, the first budget proposal that could include related measures would be Budget 2014 (for the fiscal year beginning Oct. 1, 2013), and we believe a delay beyond that time is possible.

Remember, up until the President’s attack, even Democrats on the Deficit Commission were praising Paul Ryan’s willingness to engage the issue “at an adult level.” Everyone expects congressional partisans to take pot shots, but for the President of the United States to have a temper tantrum over it akin to a three year old denied a lollipop? That’s unheard of.

The President’s open hostility to an adult plan while offering no substantive plan of his own was the straw that broke the camel’s back. And because Mr. Obama still cannot deal with the issue as an adult, we will keep heading down this treacherous road.

COMMENTS

  • ohiohistorian

    It HAS to be George W. Bush’s fault. After all, President Obama is only trying to clean up his mess. I guess the cleaning bills are just SO high?;o

  • charlie520

    Printing money has always allowed them to tax us by devaluing the dollars in our pocket instead of coming directly to us with taxes. Look at where that has gotten us. Debt and a devalued currency (paper dollars worth 4 cents and silver half dollars are worth $15.

    End the Federal Reserve by unwinding the mess and we force a correction. If they want to spend more then they have to experience the pain of taking more in taxes before seeking re-election. (This assumes, of course, the current situation prevails where we are the only ones who will buy our own debt.)

    It also de-fangs the lobbyist industry in DC because there is no printed money to spend.

    When the lead story is Real Estates values plunging in DC then we will know we’re on the right path.

  • GreyCloak

    Hey, Republicans haven’t balanced a budget (almost) since FY2000.

    Democrats are better: they can overspend at least twice as fast.

    Congress says they want some honesty: they’ve got it.

  • politicalqrm

    a very sad day in our history. With the BRIC conference last week, and their plan to use their currencies in trade instead of the dollar, this just puts the nail in our economic coffin.

    Well, Obama has accomplished what he wanted to do; what all Marxists want: destroy the country from within.

    And this man has a chance to be re-elected?

    Yes, I know the Republicans did their part when they were in the majority, but Obama has taken us down to an even lower level.

    http://politicalqrm.com

  • ag8tor

    the head of the snake. Let’s throw in Pelosi, Reid, Geithner(?), Holder, the EPA, the Dept. of Interior, Franks, Dodd and the IRS. Please don’t forget the wimpy assed Republicans who even with a majority are still “reaching across the aisle”. Bush didn’t help especially during his last term but Hussein has made him look like Bob Cratchett! For the life of me I can’t understand why anyone would have voted for this snake oil salesman when it was clear he didn’t have any business experience or any other experience for that matter. If he is re-elected even the far left libs will start to feel the pinch. It is a must that we keep the majority in the House and take back the Senate. That way we could at least ride herd on him just as they did with Clinton and her husband!

  • thequill

    Until recently the Dems have controlled both House and Senate. If you believe it’s Bush’s fault, you must also believe that pink pigs can fly.

  • thequill

    Until recently the Dems have controlled both House and Senate. If you believe it’s Bush’s fault, you must also believe that pink pigs can fly.

  • themarathonman

    …being facetious, quill. :=)

  • themarathonman

    …being facetious, quill. :=)

  • Marcus_Traianus

    Given the latest budget “deal” in which Mr. Boehner”s great “success” can be counted in miniscule millions and Obama laughed at his commitment to eliminate czars- I am guessing pretty soon we can add Boehner to the blame list.

    Add to that Geithner’s comments that Boehner has already committed to raising the debt limit, sans commitments, my personal bet he also eventually throws Ryan under the bus and the fact he can’t control his own caucus with this “Gang of Six” stooges- it is frankly startling that S&P went so easy on this rating.

    I think the appropriate phrase in hip contemporary vernacular is “we’re boned”.

  • almas

    President Obama does not have much substantive to say but uses many words to say it, and obviously says more than his prayers.Whenever he speaks, the cost to Americans goes up.

    After his recent speech, S&P Lowered the outlook For U.S.

    Standard & Poor said there was a risk that American lawmakers would not address ?long-term fiscal pressures.?

    Actually, Congress need not address the long-term fiscal pressure. Economists are missing the point. If increasing the National Debt Limit is not passed, government must operate on approximately 60 cents on the dollars required, not sufficient to pay principal and interest?WRONG!…

    Payments would have to be prioritized and if government pays principal out of current receipts first, to the extent that principal payments are made, government may in turn borrow that amount of money without going over the maximum debt limit. QE2 or 3 by the Federal Reserve would be used to buy the additional debt because that would not put the country above its debt limit.

    Exactly like a consumer who uses one credit card to pay off another, revolving credit and then using the additional borrowing capacity to pay off still more debt. As much as is repaid is added back to the credit line allowing for payment of monthly principal first, re-borrowing that amount of money, and going on to the next priority, or even more principal payment, ad infinitum until monthly principal obligations have been met. Any remaining balance can be prioritized to fund regular government obligations.

    Not perfect, but combined with continuing chiseling down of expenditures, enough time will be bought to get the permanent job done right.

  • throwback59

    All hail the Master of Disaster.

  • robobbob

    Card companies look for people trying that scheme and cut them off when they find them. At best it buys some time. Mostly it ends in disaster. And the world in general will do the same to the US.
    Go ahead and self finance. See what happens when you stop making interest payments. Watch as the dollar is removed as the reserve currency. If you think inflation is bad now, look at what happens when the world doesn’t want dollars anymore. Everything that the US imports will explode in price. The US the standard of living would be no better then a third world country.
    Of course, thats going to happen anyway if washington doesn’t get serious soon.

  • Duke

    Based upon what the Republicans are fielding so far, absolutely!

    Between Trump and his birfer crapola, and the high-school cheerleader Tea Party rhetoric coming from Palin and Bachmann, I’m starting to get both nauseous and afraid. And if The Donald runs as an independent we’re screwed and tatooed!

    Paul Ryan was on Stossel this past weekend. He makes so much sense he gave me enough energy to continue breathing for another week. PLEASE someone like him come out of the clear, blue sky and kick this unqualified, childish Marxist out of my White House and out of my sight!

    So far we’re gettin’ nothing but recycled McLames and Doles!

  • http://theminorityreportblog.com Repair_Man_Jack

    50% of the US pays no taxes. A vote for a Democrat is a short-term vote for free money. You can’t lose with that campaign slogan.

  • nickel

    They don’t live in the real world. Many are involved in their own problems and only need talking points when asked something they don’t care about or understand like government or the economy. They then blather whatever they heard Katie Couric tell them on the last “news” show they happened to watch and get back to the important stuff, like American Idol.

    You can really rationalize with these people since they don’t think they “feel” and as all experts in Myers Briggs know, their ain’t no changing basic wiring.

  • nickel

    They don’t live in the real world. Many are involved in their own problems and only need talking points when asked something they don’t care about or understand like government or the economy. They then blather whatever they heard Katie Couric tell them on the last “news” show they happened to watch and get back to the important stuff, like American Idol.

    You can really rationalize with these people since they don’t think they “feel” and as all experts in Myers Briggs know, their ain’t no changing basic wiring.

  • ihateliberals

    Obama has spent more in the last two years than the last four presidents combined. In 1984 the deficit was $175 billion under Reagan. Under Obama we are borrowing $4 billion per day just to pay interest on the deficit. At that rate in 43 days we will have borrowed more than the entire 1984 deficit. We can’t afford Obama and the Democrats anymore.

  • ihateliberals

    about Republicans dong their part. John Boehner is certainly playing a big role in adding to the deficit. Nancy Pelosi has more balls than Boehner. he goes behind closed doors and cuts deals. This is not what we voted for in 2010 and Bohner needs to be taken out and a Conservative Republican put in place.

  • renny

    at any moment–see his reaction to reporters in TX. He could barely stop himself from leaping into the press crowd and strangling his questioners. He has retreared to his lair in Chicago for the reelection.

    He has always been very thin skinned and touchy, and some press will break ranks and stop treating him like puff pastry in a hurricane wind in 2012.

    Trump is an interesting addition to the mix because he is not afraid to say what every one else fears mentioning in public. But he should get off talking about other candidates, it just gives them notice, and start hammering on an ec. program like lower the cost of gasoline, build more refineries, cap fhe EPA, loose America’s energy industry, create jobs, provide a new source of taxation, yadda.

    o can win the election, but only if the Reps. don’t work and fight to stop him. He never had a program and now has nothing to defend. He knows less about ec. than an English major like me and what he knows doesn’t work. GM stock is imploding.

    He cannot speak extemporaneously, and now that we have been inoculated against being called racists for opposing him, some good debater should clean what clock he has on broadcast tv. Then the explosion will be heard round the world.

  • cpa2222

    The company’s executives get worried. We have an inexperienced, over exalted, spoiled kid running policy, with a bunch of theoretical nerds pulling the strings. With half the population receiving taxes, not paying taxes, we are screwed. I forget the old Roman senator, perhaps Cato, who said that once a polity can tax itself, it is doomed. We now have an entire ruling class doling out money for “bread and circuses.” Our only hope is to change the tax code so that everyone who lives here pays some taxes and feels that pain. Reduce food stamp qualifications backup where they were at the start of Obammy’s administration.
    When was the last time you went to a social security office? See any English-speakers there? Stop the stupidity of giving illegals anything but a one-way bus ticket south, and that will be a second manifestation of economic sanity.
    Then, stop All foreign aid to countries who vote against our interests

  • len_kc

    others are paying attention! Remember not so long ago when you could pick up a magazine and see the price printed, “$2.00 US, $2.25 Canadian”? Well guess what; as of this morning it would cost you $1.04US to buy ONE CANADIAN DOLLAR. AND $1.05 to buy one Australian Dollar. When it comes to credit, it’s what others think that sets the rules!

  • johnt

    At this point in time it’s fantasy or stupidity not to realize what’s right under your nose, better you believe in pixies. Not for nothing did he associate with Wright and Ayers, this is the payoff.
    The really crazy part is all the lib freaks who don’t want to shave a penny of this financial monstrosity.

  • swi2522

    its probably to late to do anything about stopping the callapse of the dollar and the default of our debt
    i think the politicians know this in washington and that is why there is no real austerity plan moving forward
    this is the fundamental change obama talked about

  • carolina

    is extremely important for the health of our economy. At the rate we are going …. the mistakes of the 70′s won’t be history any longer. We will get to relive that nightmare again.

  • josephk1972

    Are in large part responsible for the financial crisis. These are the same guys that rated giant piles of fraudulent sub-primed mortgages AAA and then downgraded them only after they turned out to be worthless.

    Why is anyone listening to anything they have to say?

  • http://theminorityreportblog.com Repair_Man_Jack

    Do you contribute to a military or government retirement plan?

    Apparantly, the UST can continue to debit your paycheck, and just not invest any of the money. Thereby , they use it interest free untilt hey get the raised debt ceiling and can go back to spending.
    http://www.govexec.com/dailyfed/0203/021903cd2.htm

  • Duke

    the ego balloon sitting atop Oblahblah’s shoulders. It is truly his weakest spot, and someone like Trump needs to get off the birfer issue and pop that balloon.

    Unfortunately we’ve got too many BS salesmen out there with a mouth full of samples. Too much going along to get along, and not enough willpower to bite someone’s head off for saying something stupid. It’s getting to be time to catch the Little O Man without his teleprompter, make him say something stupid and then call it that.

    Ryan’s been, in a gentlemanly way, doing some of that over his budget plan, but he’s got to make it more personal – throw some red meat at The Moonbat Messiah. The time is here to take off the gloves and call a stupid idea a stupid idea that will force America to its financial knees. If the person doing that is perceived to be a political pipsqueak by the Little O Man, watch the head explode!

  • kestrel

    The fact S&P downgraded the credit *outlook* — in other words sounded a warning — rather than actually lowering the credit rating, is, according to Investor’s Business Daily, “another reminder that S&P, Moody’s and Fitch are far from being the oracles of dependable wisdom many once thought…. the ratings agencies gave AAA seals of approval to mortgage-backed securities up to the very day they were exposed as actually being worthless.” — IBD editorial

    I DO NOT want the debt ceiling raised. Despite Democrats’ scare tactics, we will NOT default on the debt if we don’t raise the ceiling. Seventy percent of Americans oppose raising the debt ceiling.

    There are two things people know (beyond that they hate ObamaCare): 1. Government spending is in the stratosphere, and 2. The debt ceiling vote is a chance to cut up the national cradit. — And congress had better do it.

  • The_Gadfly

    It’s important to also recognize WHY they are understating the peril and couched their warning so carefully. I am unhappy their warning focused on “coming to an agreement” rather than adopting most or more than the Ryan plan. But I also recognize that The Big 0 is pointing the Geitner gun at their head. He has the power to “investigate” them into corporate death. They are trying desperately to avoid that while at the same time warning investors. They did the same thing with mortgages, only we weren’t paying as much attention back then because times were good.

  • Flagstaff

    if it comes to pass, the debt service on the national debt will go up. Not good for the country.

    If Ryan’s Path and Obama’s Fantasy are both modified to reflect that fact, Ryan’s Path will be even better in comparison. I don’t know what growth rate Ryan used, but the 5% GDP growth rate that Obama dreamed up is completely unreasonable; even more so now.

    Don’t expect the Democrats to be any help in solving this truly national problem. As Senator DeMint pointed out last recently they simply can’t help, because they are wedded to the idea of more and more spending to satisfy their constituency’s demands. The work of setting the country upright again will fall entirely to the Republican ants; Democrat grasshoppers will be solely engaged in providing fiddle music to work by.

    The Republican Party must become the Party of America, because the policies promulgated by the Democrats are not only unworkable, but detrimental to a stable society. While everybody was watching but nobody was seeing, the Republican Party has become the Big Tent Party we were calling for last year. The real policy debates are going on WITHIN the Republican Party, between the fiscal hawks and the political pragmatists, who, to give them their due, are right to recognize that IF a goal is to pass viable fiscal legislation, it must get not only Democrat votes in the Senate but Obama’s vote in the White House.

    The strategic plans being resolved now are whether the goal should be to go that far, or perhaps to just get a bill TO the President, where his veto would put him on the spot; whether it should be to just put our strongest plans out there, forcing the Senate to vote them down; or whether we must swallow our best ideas and accept a below-market CR and a similar swallow of an increased debt ceiling “for the good of the country.”

    Given the makeup of the White House and the Senate, there is NO chance that the best budget legislation can be passed in the next two years. If we accept that it is irresponsible to avoid passing 2012 and 2013 budgets, then we MUST also accept that said budgets will contain items that we don’t agree with. Our mission today should be to present the budget in such a way that we can also explain WHY we are either willing to or have been forced to accept those items, and also WHAT we would do if we had the ability (given a Republican House, Senate, and White House). And both Tea Partiers and RINOS need to come to an agreement to back each other in the fight, rather than to undercut the effort by backbiting. A unified front, formed from the far ends of the Republican Party, will be needed to prove to those on the outside looking in that we’re serious in our desire to do right by the country, not just for political gain. The comparison to ANY plans put forth by Democrats will be stark.

  • thebadpiper

    Obama was aided and abetted by the Congressional Republicans who lacked the intestinal fortitude to do the job they were elected to do in the 2010 elections. Speaker of the House Boehner and the rest of the political class so-called “Republican Leadership” showed their true colors as “consensus” get along – go along, let’s all join hands and sing ‘kum bah yah” politicians, whose greasy, pork grubbing finger prints are all over the current government fiscal crisis by caving in on recent budget “compromise.” As long as the only difference between Republicans and Democrats is over the degree of government control and spending, we will never be able to address the fundamental issue – the size and scope of government – that must be resolved in order to avoid future national bankruptcy.

  • The_Gadfly

    on the birfer issue is all about popping that balloon. And if Trump got to run his interviews on air the way he wants to, they might work. The problem is the MSM runs them the way THEY want to, so Trump looks obsessively focused on it. So he needs to focus on the other issues until he can go mano e mano in a public forum and THEN pop him with the birfer issue.

  • kestrel

    In the year since AZ passed SB 1070, many illegal aliens have voluntarily left the state (going to other states), resulting in a $500 million savings in education costs and a swift decline in the prison population, not to mention a higher employment rate among legal residents. Source.

    Politicians who won’t enforce immigration laws are slapping their constituents in the face.

  • The_Gadfly

    they did it because the government ordered them to. Government did this with the false pretense of Redlining charges. So the banks were forced to make KNOWN bad loans. When you have a known bad loan, the only way to mitigate the risk is to chop it up into itty bitty pieces and mix it in with known good loans. Yes, it is only a short term solution, but when the government has a gun to your head, what else are you going to do?

  • The_Gadfly

    in inside the beltway comings and goings don’t know whether to compromise or just put him on the spot for the veto. The answer is: Put him on the spot for the veto. He voted “present” more often than he voted all other votes combined when he was a state politician. He voted “present” while Dingy Harry and the San Fran Nanny debated Obamacare. Heck even voted “present” on attacking Libya. When faced with a real crisis, he’ll fold like rice paper.

  • kestrel

    What can be done to change this? It sounds like the same thing as the Democrat (and ACLU) tactic of financially destroying people and entities through legal action for which there is no “loser pays” or other penalty against bringing spurious charges. Wow, this country’s a mess.

    And since you mention mortgages, here is something I don’t understand: Why is Barney Frank (and others who ignored warnings of the impending mortgage mess) still in the Senate? I don’t mean “still there” by fooling voters. Doesn’t the Senate have the power to remove members? Maybe it’s time to start using it. I’m beginning to think the Senate’s self-policing(?) powers are as useless as those of the Catholic church in protecting the public. Why does congress waste a bunch of time investigating Charlie Rangel and “censuring” him (what’s “censuring”? The public sees no consequences to him. Rangel keeps his lucrative and powerful job), rather than turning his case over to the IRS and letting them put him in prison for tax evasion (as would happen to you or me)? What the heck is wrong with this country?

  • kestrel

    now investigate S&P if they downgraded the US credit rating?

  • http://908StraightSt.wordpress.com/ mbecker908

    So is Rangel.

    And you can be sure that Hell will freeze over long before any Senator or House Member is expelled for supporting bad legislation. Don’t like your Senator/Rep? Get involved in local GOP and build a bench so that we can actually field candidates for these races. Frank had a real race on his hands in 10 and while he still won by a fairly wide margin, for a while he was scared. He hadn’t had an opponent in years.

    Do not expect – and be careful what you wish for – the House or Senate to do the job of the voter when it comes to seating a Member.

  • melbedewy

    We need DC Republicans to take the gamble and force a shutdown instead of proposing that we “only” keep driving over the debt cliff at $4.5 billion a day rather than $5 billion.
    Make no mistake though, those on the Right need to get used to the idea of a VASTLY reduced military as part of the mix.

  • lightfootletters

    President Obama is continuing the broad policies of President Bush, is undeniable in most all areas. From the prescription bill to the health care bill from gitmo to the middle east, from bailouts to union concessions. Just more of the above under President Obama. And, neither President can act without Congress which is most responsible for the current economic conditions. Congress not the President. Not any President. And, it will be Congress that cures the problems or continue to make them worse.

  • kestrel

    Yeah, Chris Dodd in the senate has wisely removed himself. I know that Rangel’s in the house. He belongs in jail. I am soooo tired of the lack of accountability. You are right about not being booted for bad legislation. I am involved locally. It’s a long haul here. I am absolutely against raising the debt ceiling. Anything else?

  • Diogenes314
  • http://908StraightSt.wordpress.com/ mbecker908

    I just re-read my comment and the part “if you don’t like…” came off really snippy in the re-read. It was not meant to be and I apologize for the tone I perceived. It was meant to be more of an umbrella kind of comment and came off poorly.

  • wisconsinnorm

    I can’t take the conservative/liberal crap anymore. Both sides claim to be responsible Americans trying to solve big problems. I want a list of simple activities each political persuasion could easily adopt to make the situation better.

    For example, I recently purchased my first motorcycle and went on a severe diet and am reducing my credit cards to a zero balance which will be accomplished in just three more months. Now, am I helping or hurting the situation by using way less gasoline, reducing the amount of food American agriculture must produce, and keeping the credit card sharks out of the formula?

    Anyway, I want such a list compiled by credible economists. If millions of Americans simply do one of more of the following consistently, the economy will get better faster…I don’t want a cute response to this either-like “don’t vote for”..Concrete activities only please. Thinking small times millions equals billions…then trillions…

  • kestrel
  • Diogenes314

    Will S&P do?

  • Diogenes314

    The Democrat spin on this is that the problem is the Republicans not promising to raise the ceiling. Kaminsky shows that S&P states that the problem is the spending and uncertainty over whether Obama and his Merry Men can thwart attempts to cut said spending.

  • wisconsinnorm

    Yes… What would the top 100 things S&P would recommend every American start doing right now! I hope they would list SPECIFIC MANUFACTURED ITEMS (Exact make and model number) one could purchase which cost less than 1,000 bucks if you need one, go out and buy it…

  • kestrel

    Becker just apologized! Hell has frozen over! Obama is out of office! Leftists everywhere have just spontaneously self-combusted! SanFran has sunk into the bay! My dog Chowderhead obeys commands!

    Apology accepted. I also apologize.

  • wisconsinnorm

    I meant to say the top 1000 things S&P would recommend every American should consider doing or purchasing which would accelerate our road to recovery…

  • robtjonz

    I escaped Massachusetts in the 70s to join the military and serve my country. My thoughts on this are that both the Republicans and Democrats are at fault. They seem to have this pattern where one of them sits in The White House and screws We, The People over for 4-8 years and then BAM, hand-slap, tag-team politicians. The other side then screws us over while telling us that the other side is to fault for everything that’s gone wrong.
    What’s gone wrong is that men of low character have been elected President for decades.
    And We, The People are to blame.

  • bcb1

    I agree with you that there is far too much simple minded name calling on both sides of the political aisle. It seems that whatever the other guys are for; the opposite side must reflexively be against, no matter what it is.

    I commend you for wanting to help the economy “get better”, but unfortunately I don’t think there is some sort of easy checklist of stuff to do that has been compiled. However, if you think about it for a minute, there are a lot of little things each of us can do.

    *patronize your local farmers markets for apples, peaches, corn, tomatos, etc when possible in the summer months. Every dollar you spend goes to help keeping your local farmers afloat.

    *patronize your local bike shop instead of buying a cheapie, throwaway $100 bike at walmart. Good bikes are expensive but are well worth the cost.

    *You say you just bought a motorcycle. Make sure you use a good local independant mechanic when it comes time to service it.

    *eating less (and eating healthy) is just good sense all the way around. It makes you live longer, gives you more energy, makes you feel better, etc. Good for you. You might want to think about taking up running, biking, or swimming to go along with your new healthier diet.

    *You say you are paying down your debt – again, good for you. That’s awesome.

    *Buy mulch and plants from your local mom and pop nursery rather than Lowes or Home Depot. You’ll also find you probably get better service from people that actually know what they’re doing.

    *Same goes for plumbing and hardware – try to use local shops if at all possible. The last time our water heater went out (on Black Friday of all days), our local plumbing supply store was here two hours after I called and had a new unit installed very quickly – and for less than the similar 50 gallon model at Lowes cost!

    Sounds like you are making some very good choices. I’ve been around for quite a few years, and I’ve always tried to help out local businesses and farmers if possible.

    This is far from a list of “1,000 things from a credible economist”, so I apologize in advance for that, lol. But as they say, each little bit helps.

  • Flagstaff

    the choice to reach a compromise with the Democrats isn’t a decision based only on the politics of the situation.

    To take the other side first, a decision to put a budget or other fiscal legislation in front of the Senate and then the President that we are reasonably sure he’d veto is strictly one that’s made to set out our position, to force them/him to declare THEIR/HIS position, and to make the difference clear. Since the end result would be no enacted law but some contrasting positions revealed, the process would be completely political. It would strengthen the Republican position among many of its members, and it would appeal as well to independents who have a desire for fiscal responsibility “no matter what.” Others would disagree.

    On the other hand, if Republicans decide to put forth a fiscal package they think is flawed but still better than no legislation at all, one which His Majesty would probably deign to accept, that would be BOTH a POLITICAL- and a Congressional RESPONSIBILITY-based decision. Politically, it would be seen as a responsible attempt to achieve comity, to make compromise possible, and to “keep the government open.” Those people, including some Republicans, who are afraid of the consequences of failing to raise the debt ceiling or of the “threat” of closing national parks would applaud such legislation, as would many independents (again) who favor government operations and subsidies more than a balanced budget. And of course, the independents who are farther to the left on the social scale would also approve on the face of it. (It’s unlikely these folks would ever provide ongoing support to Republican candidates or policies, but the idea is that they might stick with us for two years if we can show that it is Obama who is unreasonable.)

    You may note the asymmetrical nature of the dilemma. There are two separate issues that promote the accommodative approach–the political appeal of cooperation, and the further appeal of our accepting Congressional responsibility to “behave like grownups”–while there is only the politics of the question that advises us to follow a confrontational approach.

    While it’s nice to predict that His Highness will “fold like rice paper” if faced with a strong House and a tough decision, it also means that we are convinced that HE will regard it as a “tough decision,” and it further requires that we are, if not sanguine, at least willing to accept the consequences of his veto, both politically and as it affects the operations of government and the financial markets. Given his temperament and beliefs, he might feel the decision isn’t tough at all.

    Finally, a really strong statement will never get past the current Senate. My opinion is we should therefore send a VERY strong statement to the Senate, one that will force them to explain themselves in rational terms as they reject it. We should NOT be timid. From there, we are better positioned to get every concession possible from the Senate, resulting in an package acceptable to most of us. Given a package that has made its way through a Democrat Senate, Obama is more than likely to sign it.

    This strategy would require that it be applied to the 2012 budget, not to a CR or the debt ceiling. It wouldn’t work on a short-term time-limited issue.

  • Flagstaff

    Wrong questions all around. You don’t need advice from a group of “credible economist(S).” One will do. Read either Milton Friedman or Thomas Sowell or go back to Adam Smith.

    Healthy economies are driven by the aggregate of millions of individual decisions made by individual consumers. We have a problem because the government insists on inserting itself into each transaction to one degree or another.

  • gekster
  • thebadpiper

    We need an effective military rather than the politically correct bureaucracy that it has become today. There are tremendous opportuities to cut the fat out of the defense budget as long as the appropriate reform measures are taken to make the force that we do have effective. There are serious questions that need to be addressed, such as “does a separate Air Force make sense in a combined operations environment?” Unfortunately, the military-industrial complex is so politically powerful and entrenched that any meaningful reform will have to come from the outside. Origional thinking within the establishment, such as the innovative and out-side-the-box reforms proposed over a decade ago by then Army Colonel Douglas Macgregor, is not tolerated by the entrenched military bureaucrats and quickly crushed along with their proponents. The establishment idea of reform is to reduce the number of soldiers in a squad, the number of squads in a platoon, the number of platoons in a company, the number of companies in a battalion and the number of battalions in a brigade. This degrades military effectiveness by reducing boots-on-the-ground combat capability, but preserves the number of high ranking command and staff jobs. The Colonels and Flag Officers then retire out of these positions and transition into the defense industry where they sell weapons that aren’t really needed to the Pentagon so that politicians can brag they are strong on defense when all they are really doing is using taxpayer money to provide unnecessary, high-paying, defense industry jobs to buy the votes of their constitutents. By all means the defense budget should be a legitimate target for deficite reduction.

  • josephk1972

    you have absolutely no idea what you’re talking about. the redlining issue has to do with why the community reinvestment act was passed in 1977. The rating agencies had nothing to do with that or the securitization process, which is the other part you’re referring to. The “chopping it up into itty bitty pieces” concept was created in the early 1970s (so before the CRA existed) but became popular in the ’80s when it was used to create pools of customary conforming mortgages. No one held a gun to the rating agencies heads. It was more like a giant bag of money being held by the i-banks that underwrote this stuff.

  • almas

    NOTICE THE LAST 2 LINES OF MY COMMENTARY.

    “Not perfect, but combined with continuing chiseling down of expenditures, enough time will be bought to get the permanent job done right.”

    Congress does not have any better option except to print money, devalue the dollar, set the stage for another currency to replace the dollar as the world reserve currency, increase spending, get re-elected as a reward for a bad job done badly and God bless our THIRD-WORLD grandchildren.

  • almas

    NOTICE THE LAST 2 LINES OF MY COMMENTARY.

    “Not perfect, but combined with continuing chiseling down of expenditures, enough time will be bought to get the permanent job done right.”

    Congress does not have any better option except to print money, devalue the dollar, set the stage for another currency to replace the dollar as the world reserve currency, increase spending, get re-elected as a reward for a bad job done badly and God bless our THIRD-WORLD grandchildren.