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EDITOR OF REDSTATE

Speaker Boehner Commits Us To A Credit Downgrade

By: Erick Erickson (Diary)  |  July 25th, 2011 at 02:56 PM  | 

RESIZE: AAA

Congresswoman Renee Ellmers (R-NC) was on Fox News a while ago saying House Republicans are standing behind John Boehner and his proposal. They might want to think again.

Having now reviewed it, it seems pretty clear that we will lose our credit rating as it does a lot of what the credit agencies have said not to do — mainly to punt.

Beyond the Speaker’s spin, here’s what his plan actually does.

The plan would raise the debt ceiling by $1 trillion, but would only cut $100 billion next year (at best) to get a combined total of $1.5 trillion in cuts over ten years if subsequent Congresses leave everything alone. The odds of that happening are zilch. And do we really think in an election year either side will want to even touch $100 billion as a best case scenario? Hell, that’s what the GOP promised when it took over in November and it failed to deliver. [Editor's Note: We now know it will be a $25 billion cut, not a $100 billion cut]

More troubling, the Speaker wants to then have the debt ceiling fight again next year and you and I both know they will cave again and Barack Obama will be hailed as a conquering hero in the run up to the 2012 election.

But most troubling is this “Super Congress” commission that can force through tax increases and the Speaker’s only assurance that it will not happen is “we won’t put people on the committee who’d vote for tax increases.”

Of course, Saxby Chambliss was one of those Republicans who was always opposed to tax increases until he suddenly wasn’t.

As for the credit reporting agencies, they’ve said the whole time that we need a long term plan. This plan does nothing but punt.

It neither cuts, nor caps, nor balances. This plan only keeps faith with “cut, cap, and balance” in the way members of Congress are faithful to their wives back in district and cheat on them with every short skirted intern while in Washington.

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COMMENTS

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  • inovrmihd

    Eric, I think the best thing we can hope for, and I hope you talk about this on your radio show, is to push through the August 2nd. “deadline” with no deal.

    Even if the Aug 2 date is the real deadline (see today’s Wall Street Journal for why it probably isn’t), it will not result in Armageddon, which means that the Whitehouse and Geithner will be thoroughly discredited, as they have been crying to anyone who will listen that the economy will be destroyed if we can?t get a deal by August 2nd.

    Judd Gregg talks about this on the Hill

    (http://thehill.com/opinion/columnists/judd-gregg/173167-opinion-gop-must-plan-for-debt-limit-fallout

    But he has the political implications all wrong.

    First, it is highly unlikely that Obama would not send out social security checks, as the Republicans would immediately be able to point out that there was enough money, but social security is not one of his priorities. Second, any choices the Whitehouse makes are going to anger some constituency, and the story will turn to the President’s priorities and why someone else is getting paid while “they” are not, not to mention the difficulties of justifying making interest payments to China. Most importantly though, the world will not come to an end on August third, and after months of claiming that no deal by August 2nd will result in Armageddon, the President’s and Tim Geithner’s credibility will be shot when it doesn’t happen. It will be reduced to merely a spending fight, with a thoroughly discredited president.

  • Repair_Man_Jack

    But most troubling is this ?Super Congress? commission…

    We’ve done 17 of these in the last 30 years over the deficit. They are as useful as sending Amy Winehouse to rehab.

  • clintonformccain

    The House Republicans should have passed a short-term debt limit increase weeks ago and called Obama’s bluff. With Democrat control of the Senate and the Whie House, the House Republicans need to be thinking play defense and slow the game game down. The idea of grand initiatives just isn’t in the cards. Forcing Obama to raise the debt ceiling again, while getting some spending cuts, and avoiding tax increases is a win for the Republicans, no matter how you look at it. I wish the Republicans had done this week’s ago.

  • avgjo

    when are we going to make it clear to Boehner that this makes his future career questionable at best? McConnell’s plan went down in flames, and I believe that part of that was the unified front on primarying him put on by RS and others.

    Boehner needs similar treatment. Not later, either. That will do us no good.

  • cordpt

    The plan would raise the debt ceiling by $1 trillion, but would only cut $100 billion next year (at best) to get a combined total of $1.5 trillion in cuts over ten years if subsequent Congresses leave everything alone. The odds of that happening are zilch. And do we really think in an election year either side will want to even touch $100 billion as a best case scenario?

    Why do you support the CCB when it only cuts $111 billion in the next year and the odds of it happening are even smaller? Something doesn’t make sense.

  • bk

    Reid was on camera a little while ago saying that his plan gives the GOP everything they want – no tax increases and painful cuts greater than the amount of the debt limit increase. So there’s no reason for the GOP to vote against it except for their fear of the far-right extremist tea party.

    He was followed by Chuckie “I never met a camera I didn’t like” Schumer, who added that the Boehner plan was not only wrong, it was DANGEROUS.

    They are obviously terrified of having to vote on it again before the next election.

  • JSobieski

    The difference between CCB and some of the backup plans we are reading about is minimal, particularly if you presume that anything outside of year 1 is fog at best, smoke/mirrors at worst.

    How is the Boehner two-step plan a capitulation, but the CCB plan a victory when the bottom line is that CCB only includes $11B more in cuts, while extending the debt ceiling beyond 2012.

    The Boehner plan cuts $11B, but revisits the issue in April 2012.

  • clintonformccain

    Did those of you hammering Boehner really believe that it would be possible to do comprehensive budget, tax reform, and entitlement reform in a debt ceiling increase bill? Seems to me that getting $1.2 billion in budget savings for a six month debt extension with no tax increases would be a pretty good days work for the Republican House. Other than lamenting the inablity to achieve the impossible, I’m trying to understand why the Boehner plan is so awful.

  • agconservative

    Short answer: It’s not. As long as the cuts are legitimate, this is a best case scenario and hardly caving. While a commission is complete B.S., it does not have legislative powers. It can’t force tax increase, just a proposal which Republicans can easily vote down. Part 2 of the plan is just a screen to satisfy people asking for a big plan, which really can’t happen until after 2012. As for the Credit Agency argument, if a cut this big doesn’t satisfy them, no plan that can pass with the current Senate and WH will. This plan is the best chance to prevent downgrade. CCB requires 66 senate votes, that is impossible with the current Senate. We have to accept that until 2013 that plan is not possible and doing nothing will have real financial consequences. Passing no plan will also result a financial downgrade.

  • littlehouse18

    ..

  • westbrook348

    Either we stop borrowing & balance our budget, or we continue borrowing more money until we can’t afford to even service our debt, forcing a default. All the proposed plans claim to save us, but they (including CCB) are all just setting us up for the eventual failure of the United States. So the title of this post should actually read “Boehner & the rest of GOP leadership committed us to default a long time ago when they refused to cut spending & balance the budget.”

  • Marcus_Traianus

    I will preface what I am saying by stating I have not seen the details, only concepts/big numbers.

    Nonetheless- credit agencies will downgrade US debt? You sound fairly certain in that prognostication. But given this is pretty close to the numbers on CCB, what’s to say they don’t do that irrespective? Plus it’s already built into the current market anyway. So I am not seeing a meltdown come out of this deal.

    I am also pretty sure Obama does not want to have this conversation next year again. Hence the reason, he, not either party in Congress, scrapped the deal Boehner and Reid had. Hardly, someone who will be hailed as the conquering hero and Mr. Obama knows it.

    I am all for negotiating hard and leading the way on improving our economic situation. But in the end we only have so much leverage. Let’s not overplay that hand.

  • snowshooze

    How could anybody want to see one from them, aside of entertainment.

  • JSobieski

    The idea that anything short of a balanced budget in 2011 or 2012 is a defeat is silly. There is still time to deal with the debt so long as we start the process in a meaningful way.

    All or nothing thinking inevitably gets you nothing. It took decades to create this mess. It will take years if not decades to clean it up.

    We have some time before we get to the point where we can’t afford to even service our debt. I suggest that we make use of it. Decrying the past or declaring the future to be lost are not productive actions.

  • streiff

    it has a little note on it that says “this note is legal tender for all debts public and private.”

    And the tubes of the internet tells me the Bureau of Engraving and Printing prints “legal tender.”

    Putting those two facts together it is pretty easy to see that we will always be able to service our debt.

  • acat

    It seems there’s a lot of mud, at least I’ll assume it’s mud, being thrown at the wall to see if it’ll stick – specifically trying to convince people that “the sky will fall” if we don’t raise the debt ceiling and, now, “the sky will fall” if we do.

    Neither is true.

    We will end up raising the debt ceiling. I want to wring as many concessions out of Obama, Reid, and Pelosi as possible, in part because every dime we save is a dime we don’t have to pay back – with interest – but also in part because we need for the voters to back Conservative candidates, and to achieve that, we need candidates who have acted like, well, Conservatives.

    Throwing in the towel after the first bell is not conservative. (Thank you for demonstrating, Sen. McConnell .. now please go away)

    Throwing in the towel after the second bell is likewise not conservative. (Thank you, Rep. Boehner, now please go away)

    So far, every time we’ve dug in and said “No”, Obama has backed down. Once he stops, then we can cut a deal. Until then, well .. we’re both borrowing dimes we’ll have to repay, and blowing our cred with voters.

    Mew

  • snowshooze

    August 10 has already been taken… by Geithner.
    So… just to let them know how much creedence we think they have…September is good. Let them rot. Do you think with just the right push, at the right time..in the right direction….we could send Obama sailing off into oblivion? He could do with a check every now and then…
    Until then, we need to reign in our shakey members and let them know we aren’t interested in snatching defeat from the jaws of victory.

  • westbrook348

    More debt means more money printing because no one but the Fed wants our bonds anymore. Sure, yeah, we pay our bond holders with newly printed cash, but they can’t buy anything with it because of inflation. That’ll sure keep interest rates down… …. …

    With your logic we don’t have to make ANY cuts to the deficit. “Washington should just keep spending because we can keep printing. Pay social security in full, no need to reform, because we have printing presses.” Oh wait but the checks people get in the mail won’t buy bread anymore! Destruction of the dollar right now would arguably be worse than default/bankruptcy/restructuring.

  • JSobieski

    The dollar will be useless when there is no price at which someone will transfer gold to you in exchange for dollars.

    You are predicting an inflation rate that exceeds 1,000%.

    There is not basis to make such a prediction.

    Inflation is a problem now, and it should be a focus of concern in the future, but you predictions of doomsday are at this point just as premature as Obama’s predictions of SS recipients going unpaid on August 2nd.

    There are a lot of things that differentiate us from the Greeks. To pretend that there aren’t is silly.

  • westbrook348

    The only reason we can still service our debt is the record low interest rates. What happens when rates rise?

    I’m not taking such a hardline stance that I insist we balance the budget tomorrow. That would be the ideal solution, but fine let’s do it your way. Let’s at least “start the process,” as you say. Problem is, no one is really starting the process. No one is actually talking about real cuts. The cuts being discussed are rounding errors, if they are even real at all & not just budgetary gimmicks. If we don’t balance the budget in 2012-13, we should at least look into cutting the deficit in half. That requires $800 billion in cuts, not even including entitlement reform. And then you’re still left with a budget deficit 50% bigger than anything Bush had.

    See our problem now? See why CCB is essentially a joke, and raising the debt limit by $2.4 trillion is just one more nail in the coffin?

  • bk

    According to Jennifer Rubin’s source, it breaks down as:
    - $1.2T in “peace dividends” that was already assumed
    - $1.2T from taking about half of the “Biden” cuts
    - $300B in interest savings, which also seems like a give if we ever borrow less

    So over half of it involves not cutting anything that wasn’t already getting cut, while the other piece involves cutting a trillion plus that everyone agreed should be cut while adding back in another trillion plus that everyone also agreed should be cut.

    Smoke and mirrors indeed – he’s taking credit for stuff that has nothing to do with the deal, leaving ObamaCare and entitlements untouched, and adding back in over a $1T in borrowed spending that needs to be cut above and beyond entitlement reforms.

  • runner12

    above posters fail to realize is that if this plan is accepted, the debt limit will go up with no specifics in cuts. If there were clear details as to the cuts, that would be worth considering.

    BUT since the plan is based on ambiguous, non-specific cuts it is a clear failure. We criticized Pelosi (rightly so) for claiming that we would have to pass Obamacare before we know whar is in it. If the GOP House goes along with this we are doing the same thing.

    Does anyone really believe that a future debt conmission will actually cut spending with big government Dems/Repubs on it? Do you really think the establishment leadership would place a Ryan or Rand Paul on those commissions? If you do, you need to pick up the phone, call your doctor, and have your head examined.

    Until there are specifics, I say the House GOP politely, but firmly tells Boehner, etc to go kick rocks.

  • westbrook348

    Who said anything about 1000%? An inflation rate of even 10-20% means no one buys our bonds unless they want to lose money. Therefore, ANY deficit spending requires the Fed to print even more money & push inflation still higher. We will definitely see inflation rates high enough to make default/bankruptcy/restructuring look like the better option. Just keep watching the gold markets, or even the Swiss franc.

  • earlgrey

    I guess this is in response to the Republican plan or somethign or maybe Reid’s plan.

    To me the messiah is starting remind me of Mr. Bean.

  • JSobieski

    I also agree that the cuts being discussed are rounding errors
    The deficit in the time frame of 2013-2017 needs to be cut in half. Reducing the deficit to below a $1T should be done in 2013. We also need to get the economy moving if we are going to make decent progress, but we will also need to reform entitlements and hold the line on spending while enacting real cuts (not just baseline crap).

    The debt is a serious problem. My reason for calling you out is strictly a Peter crying wolf concern—enough people cry the sky is falling, and people start to think the problem isn’t real.

    Getting the economy going again has to be a top concern. So is getting rid of Obamacare. We need to win the Presidency. Saying were are doomed regardless of what happens ins in 2012 is NOT helpful to our cause.

    We are on the same page, just don’t be counter productive in the effort.

  • acat

    Shame on the Greeks.

    (and good for the Swiss for not giving in)

    Mew

  • JSobieski

    There would need to be extreme hyper-inflation.

    Unlike the Greeks, we have land, natural resources, a first rate military, real industrial capacity, etc.

    The Greeks have nothing anyone else in the world wants.

  • drfredc

    The idea that politicians, who gain their power by spending other people’s money, can cut spending in any meanful way is a waste of time.

    IMHO, the only way for politicians to be able to make serious budget cutting decisions is to devolve as many of the various social marketplaces under their budgetary control back to individual taxpayer choices via some sort of reasonably constructed Taxpayer Directed Budget process. The ‘tough’ decisions for politicians aren’t so tough when they are made by taxpayers. Productive taxpayers, not politicians and special interests, would direct our nation’s future toward prosperity as well as compassion.

    Give taxpayers the option to direct a portion of their tax dollars to various charities and non-profits. For example, if 5% of the budget goes to education, a taxpayer might choose to send 5% to their local school district, their state schools, some local private non-profit school. If 20% goes to welfare, then taxpayers might choose from a wide selection of charity programs, from local to regional to national, according to their whim, not the whims of politicians buying special interest votes with taxpayer money. Etc.

    A TDB could have appeal for taxpayers of any political persuasion.

    And it would quickly and permanently get spending under control, and paying off the debt to follow.

    Bloated programs would be quickly cleaned up, overlap dealt with, failing programs would go away, dollars would flow to actual perceived public needs, not politician and special interest desires. The result would be a vibrant cost effective individually driven social marketplace that could be vastly superior to the one size fits all money pits of today.

    For more, visit http://drfredc.com/allright/tdb/tdb_form.htm

  • rightwardmarch

    The positions being staked out on these plans have little or nothing to do with policy and everything to do with politics.

    If you can’t declare victory and proclaim your growing influence (emails! phone calls!) then let it burn.

  • runner12

    use his office to manipulate and scare people. He will no doubt come off as whiny and defensive. I for one, will not be watching.

    It makes me too upset watching him spew out lies every other word. I am already mad enough at Boehner’s weakness, I am not going to add to my distress by listening to Obama.

  • earlgrey

    doing his town hall at the University of Maryland. They told me they can’t, so I asked if they would at least turn it down. She asked me point blank if it was bothering me, and I said yes. I was the only one in the waiting room so not sure why they needed it on.

  • mine

    If the GOP is caving now, surely they will bolt in 2012. If it is too hard now, what do they think it will be like with Obamas in 2012 and his hundreds of millions in ad spending. For a Republican, it doesn’t get any better than right now. The GOP has veto rights on any new spending, yet they are running around like Chicken Littles. It seems to me to be a simple message. No more debt. No more taxes. Obama, work out your spending priorities.

  • runner12

    I watched 2 seconds of that “speech” while at the gym on Fox, I couldn’t take anymore than that and I plugged in my Ipod.

  • rightwingmom52

    My dentist has TV’s in every exam room. I always ask them to switch it to Fox with the comment that I never watch the liberal media.

    I’ve also started asking my doctors and dentist if they support Obamacare and why. So far, we’re on the same page. If I ever get one who refuses to answer or supports Obamacare, I’m switching.

    I’ve asked a couple of businesses if they support liberals. I just tend to forget to do this on a regular basis.

  • kowalski

    It’s so hard to explain 20th century currency to the 2nd century.

  • kowalski

    I kid your **s not.

  • BigRedConservative

    .

  • westbrook348

    But I can’t be Peter crying wolf when the problem IS real. If we could actually get any of the changes either of us mentioned, we might be ok. But nothing is happening but smoke & mirrors & the status quo. So in that sense, the sky basically is falling, or is about to. Peter Schiff called the housing & financial collapse FOR YEARS and everyone called him Dr. Doom. Not all of us are liars like Obama who say that doom is coming just to win political points. Some of us actually see the writing on the wall & see that nothing is being done about it. And the worst part is, even when nothing’s done about it, you still have good people like Erick come out & say that CCB is somehow the thing that’s going to save us! It might be a temporary fix, but ultimately it makes the problem that much worse & default that much more inevitable.

    At least we can agree that your priorities are my priorities, and it DOES matter that we win the presidency in 2012. I couldn’t take four more years of Obama. Nevertheless, I am not interested in sugarcoating the problems with our side. That’s how the problems go unfixed. Nope, I’ll continue to criticize our GOP candidates for their support of TARP, or of Bernanke, or of the Patriot Act, and none of that criticism means I don’t think any one of them would be infinitely better than the lying scumbag we have as CIC right now.

  • kowalski

    Please do read about them. As a young boy in New Jersey, we learned about their form of currency, which were beads and trinkets that had value as currency but no formal way of exchanging them because they also had religious significance.

    http://www.bigorrin.org/lenape_kids.htm
    Let’s go back to Gold basing our currency. Then, when someone in a Russian metals corporation discovers a new lode of it, everyone’s currency will be worth 1/4th as much!

    It’ll be terrific!

  • kowalski

    !

  • kowalski

    Are one of the *only* tribes in the country that have forbidden casino gambling. I expect that to change. All the rest of the Indian tribes use every part of the dollar.

  • earlgrey

    Mr. Burns from the Simpsons.

  • victrola

    Of course we conservatives want even bigger cuts, a balanced budget amendment, Medicare and Social Security reform, ObamaCare repealed, and maybe school vouchers as a nice cherry on top, but it’s absolutely childish to think we’re going to get everything we wanted out of this deal when we only control the House and Democrats control the Senate and White House.

    If Republicans can get a deal where no taxes are raised and trillions of dollars in cuts are made over 10 years with over $100 billion in cuts in the first year alone, we won as far as I’m concerned. Especially since I have zero doubt if we win the Senate and White House back, far more austerity will be coming. No real fundamental change to entitlements and spending is going to be made until we throw out Obama and take back the Senate.

    I can understand wanting to squeeze more out of this, but you’re not going to completely change the entire federal government from only a debt ceiling deal.

  • Ned Reck

    With this Republican leadership… it is my belief that we have always been committed to a “downgrade”. Boehner…. Cantor… etc….. have all been too leaky of vessels for any true conservative to put hope into.

    Downgrade? Now it is just a matter of to what “degree” of downgrade that we are all going to suffer.

    Seeing this whole putrid process transpire… anybody who thinks more “government” is the answer truly has #@%*-for-brains.

    Ned Reck

  • kowalski

    We should really start pre-casting the Gold Standard people in Congress in their new (old) roles: as characters in F-Troop!

    http://en.wikipedia.org/wiki/F_Troop

    My vote is for Ron Paul as Sergeant Morgan Sylvester O’Rourke.

    http://www.youtube.com/watch?v=zVwFADi4Y38

  • earlgrey

    As far as I am concerned, i would rather live it up at Gitmo than be forced to listen to Obama.

    I just hope that no matter what happens the real story of Obama and his Presidency is told to later generations. Kind of sad that I have dropped my expectations so low, anyway. . .

  • hibr

    … Due to an unnecessary and incorrect dig in the last paragraph. You should know better than this :-(

    ” This plan only keeps faith with ?cut, cap, and balance? in the way members of Congress are faithful to their wives back in district and cheat on them with every short skirted intern while in Washington.”

  • avgjo

    the point was quite clear to me.

  • http://travismonitor.blogspot.com Freedoms Truth

    I agree with this: The House Republicans should pass a short-term debt limit increase weeks ago and called Obama?s bluff.

    I disagree with the gnashing of teeth over this being a boner by Boehner. timing-wise, we needed to keep Cut, Cap and Balance front and center as our position and get senate vote on it. The McConnell ‘precave’ was a diversion from the more successful strategy of pushing cut, cap and balance.The gang-of-6 likewise was a diversion. We have, thankfully, avoided getting sucked into either diversion.

    “The idea of grand initiatives just isn?t in the cards” I agree. Also, the idea of getting any GOOD agreement out of Obama is just – impossible. Can we get a ‘good enough’ agreement?

    The Boehner-McConnell two-step is ‘good enough’ short-term plan. the key is the spending cuts – if they are real and significant in FY2012, this is step forward. If we dont like whatever arrangement the committee comes up with – vote it down.

    “I wish the Republicans had done this week?s ago.” Dont. We have done enough negotiation against ourselves against do-nothing Reid and JellObama and their non-deal promises.

    This was and is an end-game compromise, nothing more. And no matter what, it will be the kind of compromise where we wish we could do more. But you dont get that kind of good deal out of Reid and Obama.

  • rightwingmom52

    I needed a new watch battery, so I went to a local jewelry store and asked to speak to the owner. I told him I try to support local businesses, but that I had a question for him. Didn’t want to risk alienating his other customers, so I quietly told him that I had decided I would no longer patronize any local business that supported the tax and spend policies of liberal Democrats. Well, that fired him up. He ranted about them for a good 10 minutes, fixed my watch and then refused to charge me because I had the conviction to stick to my principles.

    So what did I do next? Cold Warrior would be proud. I gave him my speech about getting involved and invited him to our next local GOP party meeting!