August 11, 2011 1:42 pm ET
When Standard & Poor's downgraded America's credit rating from AAA to AA+, they cited the tenuous reliability of our nation's political system. They even took the unusual step of calling out congressional Republicans for their absolute refusal to consider revenue increases as part of a debt-reduction solution. Yet the same Republicans who spent the months leading up to August 2nd playing a dangerous game of chicken with our nation's fiscal solvency are now trying to wash their hands of the outcome, deciding instead to blame President Obama and the Democrats for the downgrade. They're also arguing that the passage of a balanced budget amendment would have prevented the downgrade, even though a day after the announcement S&P Managing Director John Chambers stated without equivocation that a balanced budget amendment would hurt, not help, the government's ability to respond to the fiscal crisis.
Republican National Committee: Downgrade Is "Another Bleak Record In The Failure Of The Obama Presidency." In a research briefing on the Republican National Committee's website entitled "The Obama Downgrade," the RNC writes, "The Loss of America's AAA Credit Rating Is Another Bleak Record In The Failure Of The Obama Presidency." [GOP.com, 8/8/11]
Rep. Michele Bachmann (R-MN): "This President Has Destroyed The Credit Rating Of The United States Through His Failed Economic Policies." In a press release on her website, Bachmann stated:
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. [MicheleBachmann.com, 8/5/11]
Rep. Bill Flores (R-TX): "When Will President Obama Take Responsibility For...The First Ever U.S. Credit Rating Downgrade In History?" From a statement on Flores' House website:
The S&P downgrade is a historic setback for our Nation's government, and it confirms that the political system is broken and it starts at the top. The president proposed a 2012 budget that would create unprecedented deficits and pose serious economic risks to American families and job creators. Meanwhile, the Obama administration's allies in the Senate have irresponsibly chosen not to propose a budget plan in more than two years. When will President Obama take responsibility for the $800 billion failed stimulus, the unpopular government takeover of healthcare, his broken promise of unemployment at 8% and the now the first ever U.S. credit rating downgrade in history? The Obama-Reid failure of leadership is accelerating our economy down the road to national bankruptcy and mortgaging the futures of our children and grandchildren. [Flores.House.gov, 8/6/11]
Rep. Francisco Canseco (R-TX): "Instead Of Solving Our Fiscal Crisis," Democrats "Blocked Legislative Solutions Put Forth By The House." From a statement on Canseco's House website:
Tonight's announcement by S&P is the very unfortunate consequence of our nation's spending-driven debt crisis. Weeks ago, S&P warned that if the federal government did not reduce the deficit by approximately $4 trillion, a downgrade was possible. Washington must face these facts and must address the biggest drivers of our debt, which are mandatory spending programs like Social Security, Medicare, Medicaid and Obamacare.
Instead of solving our fiscal crisis, Washington liberals have stubbornly argued for job-crushing tax increases and smoke and mirrors spending cuts. At every turn, they have blocked legislative solutions put forth by the House. [Canseco.House.gov, 8/5/11]
Rep. John Carter (R-TX): The House Passed Enough Cuts To Satisfy S&P, But It "Was Blocked By President Obama And Senate Democrats." From a press release on Carter's House website:
House Republican Conference Secretary John Carter today called for replacement of the Budget Control Act passed into law last week with a new debt reduction plan that will cut at least an additional $2 trillion in spending over the next ten years, in light of the U.S. credit downgrade and market losses.
"We passed the best deal we could possibly get from Democrats last week to try to head this off, says Carter, "and many GOP representatives like me had to hold our noses and vote yes solely for that reason. The alternative we faced was no spending reduction and a technical default on U.S. bonds, which would have undermined the dollar far worse than has happened. Looking at the markets and our credit ratings since last Monday confirms we did the right thing to head off a total economic calamity. But we now have an initial $2.1 trillion spending cut in place with a guaranteed vote in the House and Senate on a Balanced Budget Amendment. That gives us the political leverage we need for a new package that cuts the necessary $4 trillion, repeals this stop-gap bill, and restores America's credit rating."
Standard and Poor's said last month that the U.S. needed a minimum $4 trillion in spending cuts over the next decade to avoid a downgrade. The House-passed Cut, Cap, and Balance Act provided $5.3 trillion in cuts, but was blocked by President Obama and Senate Democrats. [Carter.House.gov, 8/8/11]
Rep. Candice Miller (R-MI): Administration And Senate "Rebuffed" House's Efforts To Avoid The Downgrade. From a statement on Miller's House website:
The downgrade of U.S. securities by Standard and Poor's is a sharp edged message to Washington that massive deficit spending cannot be sustained. Throughout this year the House Republican majority has taken steps to avoid this very occurrence by directly tackling our deficit and debt only to be rebuffed by the Administration and the U.S. Senate. The time is now for Washington to stop sticking its head in the sand and avoiding the obvious. [CandiceMiller.House.gov, 8/6/11]
Rep. Phil Roe (R-TN): S&P Downgrade Is "Another Example Of How Damaging [President Obama's] Policies Are For Tennesseans." From a press release on Roe's House website:
This decision by S&P is the latest consequence of the out-of-control spending that has taken place in Washington for decades, and that has increased dramatically since President Obama took office. [...] The S&P report calls for entitlement reform - one of the cornerstones of the House Republican budget -'key to long-term fiscal sustainability.' The Democratic-controlled Senate hasn't even passed a budget. The President's proposed budget more than doubles the debt, drives spending to a new record of $3.8 trillion in FY 2011 and raises taxes by over $2 trillion through 2020. The president's policies are simply unsustainable, and the S&P downgrade of our credit rating is another example of how damaging his policies are for Tennesseans. [Roe.House.gov, 8/6/11]
Rep. Steve Scalise (R-LA): S&P Downgrade Due To "President Obama's Failed Extreme Liberal Agenda." From a press release on Scalise's House website:
"The unprecedented downgrade of the US credit rating is a resounding indictment of President Obama's failed extreme liberal agenda that has run millions of jobs out of our country due to job-killing taxes, rampant out-of-control government spending, and radical policies like the President's health care law," Scalise said. "We cannot allow our nation to keep sinking like quick sand into financial ruin, and we need immediate accountability to correct the damage done by the Obama Administration. Just a few months ago, Treasury Secretary Tim Geithner assured Americans that there would be no downgrade, and in light of last night's announcement it is time for him to do what is best for our country and resign from his post, followed by a reversal of the extreme liberal agenda pursued by President Obama that devastated our once-golden credit rating under his watch." [Scalise.House.gov, 8/6/11]
Rep. Steve Southerland (R-FL): S&P Downgrade Is No Surprise — President And Senate Democrats "Stubbornly Tabled House-Passed Efforts" To Save The Economy. From a press release on Southerland's House website:
As many of my House Republican colleagues and I warned for months, a downgrade in America's credit rating was not only likely, it was inevitable unless Washington implemented the game-changing, long-term spending cuts necessary to save this economy. After the president and Senate Democrats stubbornly tabled House-passed efforts to cut our debt, cap spending and approve a federal Balanced Budget Amendment, S&P's historic decision to downgrade should come as no surprise. [Southerland.House.gov, 8/6/11]
Rep. Lynn Westmoreland (R-GA): S&P Downgraded U.S. Debt Because "President Obama And Congressional Democrats Just Can't Seem To Put Down Their Credit Cards And Understand That The Solution Is To Cut Spending." From a press release on Westmoreland's House website:
Friday marked the first time in history the United States of America was no longer considered the cream of the crop when Standard & Poor [sic] downgraded our credit rating from AAA to AA+. [...]
This was not something that should have surprised the president or any of his economic advisers. The S&P, as well as the other credit rating agencies, have threatened for months that the federal government's failure to get its fiscal house in order would have serious consequences. They demanded a debt ceiling increase include at least $4 trillion in savings - something the president fought against with his insistent request for a 'clean' debt ceiling hike. Yet President Obama and Congressional Democrats just can't seem to put down their credit cards and understand that the solution is to cut spending. In addition, President Obama has still not offered the specifics of a plan while advocating that Secretary Geithner remain at the Treasury Department, a choice I do not agree with.
Unfortunately, this is just a taste of what's to come unless Congressional Democrats and the White House are finally willing to come to the table and make some substantial cuts. We can no longer afford to play the blame game in regards to spending: the blame lies with both parties who spent without restraint over the last 20 years. [Westmoreland.House.gov, 8/8/11]
Rep. Joe Wilson (R-SC): S&P Downgrade "An Example Of Failed Leadership" From President Obama. Wilson wrote on Twitter:
Sen. Ron Johnson (R-WI): S&P Downgrade Provides "Further Evidence That President Obama's Agenda Has Been A Disaster For The Economy." From a press release on Johnson's website:
S&P's downgrade of US Debt to AA+, together with the recent plunge in stock prices, provide further evidence that President Obama's agenda has been a disaster for our economy. No one denies President Obama came into office facing tough economic conditions, but the policies of his Administration have made matters far worse. [RonJohnson.Senate.gov, 8/6/11]
Sen. John McCain (R-AZ): "Dysfunction" That Led To Downgrade "Has To Do With The Failure Of The President Of The United States To Lead." From NBC's Meet the Press:
DAVID GREGORY (HOST): I would like you to respond to your Senate colleague on this issue of the downgrade of America's credit rating, which is an important development. He [Sen. John Kerry] calls it a Tea Party downgrade, reflecting dysfunction in our system. How do you respond to that?"
MCCAIN: Well, I agree that there is dysfunction in our system, and a lot of it has to do with the failure of the President of the United States to lead. I would remind you that Republicans control one-third of the government, the Senate and the presidency are controlled by the Democrats. [NBC, Meet the Press, 8/7/11, via MSNBC]
Sen. Rand Paul (R-KY): "While Democrats Would Like To Lay Blame On The Tea Party For The Current Economic Failure, It Is Their President Who Has ... Failed To Prevent A Downgrade Of Our Debt." From a statement on Paul's Senate website:
Blaming the Tea Party for America's debt crisis and downgrade is like blaming the fireman for fires.
The Tea Party has been fighting for a serious solution that would rescue our finances through immediate spending cuts, spending caps and most importantly, a Balanced Budget Amendment to the Constitution. With the support of the Tea Party, I offered the only solution that could have prevented our downgrade with our Cut, Cap and Balance plan.
While Democrats would like to lay blame on the Tea Party for the current economic failure, it is their President who has failed in leadership, failed to lower unemployment, failed to rescue our economy, failed to prevent a downgrade of our debt, and failed to control spending. [Paul.Senate.gov, 8/8/11]
Rep. Larry Buchson (R-IN): Cut, Cap, And Balance "Would Have Met S&P's Expectations And Preserved Our Rating." From a press release on Buchson's House website:
S&P cited last week's agreement as falling short of expectations and the political discord in Washington, D.C. as reasons for the downgrade. The Cut, Cap, and Balance approach, which I cosponsored and voted for, would have met S&P's expectations and preserved our rating. [Buchson.House.gov, 8/8/11]
Rep. Jason Chaffetz (R-UT): "Cut, Cap, And Balance...Would Have Been Better Received By The Rating Agencies." Rep. Chaffetz wrote on Twitter:
Rep. Chip Cravaack (R-MN): "'Cut Cap And Balance' Would Have Prevented A National Credit Downgrade." From a press release on Cravaack's House website:
Standard & Poor's downgrade of the nation's AAA credit rating is extremely unfortunate, but not unexpected. I urge the President and Senate Majority Leader Reid to put forth their plans to achieve long-term fiscal sustainability and confidence in our nation's credit; the House-passed 'Cut, Cap, and Balance' would have prevented a national credit downgrade. I look forward to working with my colleagues on a responsible path forward that protects Minnesota working families and job creators. [Cravaack.House.gov, 8/8/11]
Rep. Phil Gingrey (R-GA): Downgrade Shows The Need To Enact "Real Reforms - Like Cut Cap And Balance." From a statement on Gingrey's House website:
On Friday afternoon, the American people learned of Standard & Poor's (S&P) decision to downgrade the United States long-term credit rating from AAA to AA+. This came as a shock to many-but it shouldn't have. Borrowing 42 cents on the dollar is irresponsible - and unsustainable.
Although Congress compromised to raise the debt ceiling last week, S&P ultimately sent a message that larger and more meaningful cuts were needed to prevent a downgrade. The plan that best achieves this is one I've championed all along: Cut, Cap and Balance. [...]
This downgrade should leave no doubt that it's time to stop kicking the can down the road and start enacting real reforms - like Cut, Cap and Balance - to get our fiscal house in order. [Gingrey.House.gov, 8/9/11]
Rep. Tim Huelskamp (R-KS): Downgrade Was "Preventable," And Cut, Cap And Balance Contained Provisions "The Rating Agencies Said Were Needed." From a press release on Huelskamp's House website:
S&P gave Washington plenty of warning that lawmakers needed to deal with the debt, yet the warning went unheeded. Big spenders in Washington decided to interpret the markets' warnings as an instruction to borrow more when instead the markets wanted Washington to stop the reckless borrowing and unchecked accumulation of debt.
This is embarrassing, but it certainly was preventable. Washington has known all along that markets needed a strong solution to deal with the country's long-term spending and borrowing habits. The 'Cut, Cap, Balance' Act was just such a plan with appropriate short-term cuts and caps on future spending the rating agencies said were needed. Yet, Washington produced a politically-expedient plan that was an insufficient answer to the real problem, a plan that tackled the need to borrow, but ignored the even greater need to reduce spending. [Huelskamp.House.gov, 8/5/11]
Rep. Bill Huizenga (R-MI): We Must "Regain Our AAA Rating" By Passing A "Balanced Budget Amendment. From a press release on Huizenga's House website titled "Huizenga Statement on Standard & Poor's Downgrading the US's Credit Rating":
This is an unfortunate day for America. What's worse is it was avoidable: the credit agencies warned we must have a long-term substantial plan to show we were serious about attacking America's debt addiction. House Republicans stepped up to the plate with three plans that did that. Unfortunately, Senate Democrats and the President didn't even want to show up to the game, and the plan they insisted on didn't cut enough spending to prevent this from happening.
Enough is enough. This is the strongest signal yet our spending addiction has real consequences and we must stop, so we can regain our AAA rating.
We can do that with a substantial solution that cuts government spending significantly and immediately, controls it in the long-term, and ensures accountability permanently by passing a Balanced Budget Amendment to the U.S. Constitution on to the states for ratification. [Huizenga.House.gov, 8/6/11]
Rep. Jeff Landry (R-LA): Downgrade Is Evidence That Harry Reid and Senate Democrats "Should Have Followed The House's Lead With Cut, Cap and Balance." From a press release on Landry's House website:
It should come as no surprise, that after Washington has recklessly spent, borrowed, and bailed out everything under the sun with taxpayer money, America's credit rating has been downgraded. ... As I said when I voted against it and the S&P acknowledged when they made the downgrade, the Washington debt deal initiated by the Senate and signed into law by the President did not do enough to end the government's addiction to spending. It is evident that Harry Reid and his Senate Democrats were wrong and should have followed the House's lead with Cut, Cap, and Balance. [Landry.House.gov, 8/8/11]
Rep. Cathy McMorris Rodgers (R-WA): In The Aftermath Of The S&P Downgrade, "It's Vitally Important That Congress Seize This Opportunity To Pass The [Balanced Budget] Amendment." From a statement on McMorris Rodgers' House website:
Friday's announcement is no surprise to those of us who have been warning about the consequences of record spending, borrowing and deficits throughout the years. [...]
Last Monday, I supported and the House passed, the Budget Control Act, a debt ceiling agreement that cut $2.4 trillion in government spending and implemented spending controls without raising taxes.
The Act also calls for a vote on the Balanced Budget Amendment, and it's vitally important that Congress seize this opportunity to pass the Amendment and send it to the states. [McMorris.House.gov, 8/6/11, italics original]
Rep. Mick Mulvaney (R-SC): Cut, Cap, And Balance "Would Put America On A Path To ... Restore Our AAA Credit Rating." From a statement on Mulvaney's House website:
We must now get to work enacting spending reforms and structural changes to a town that is addicted to spending money and creating debt. The Cut, Cap, and Balance Act would do just that. It would reduce spending right away, install spending caps for the near term, and provide for a balanced budget amendment to the U.S. Constitution. By implementing the structural changes called for in this bill, we would put America on a path to not only restore our AAA credit rating, but also create jobs and grow our economy. [Mulvaney.House.gov, 8/6/11]
Rep. Tom Price (R-GA): "A Balanced Budget Amendment" Will "Ensure This Never Happens Again." From a statement from Price on the Republican Policy Committee website:
House Republican Policy Committee Chairman Tom Price, M.D. (R-GA) issued the following statement after Standard & Poor's lowered the United States' long-term credit rating from AAA to AA+.
"This didn't have to happen," said Chairman Price. "Instead of addressing the out-of-control spending which has come to pervade Washington, the President chose to ignore the matter. He proposed a budget which never put us on a course for fiscal sustainability, and then continued to advocate for a 'balanced approach' to raise taxes on job creators and derail a weak economy. Meanwhile, the Administration's allies in the Senate sat on their hands for more than two years, never proposing a plan to get our fiscal house in order.
"Republicans are committed to making the tough decisions and put us on more solid fiscal footing. The work of the Joint Committee will be critical to carry out these tough decisions and put the United States on a more sustainable course. But what is truly needed are safeguards to ensure this never happens again. A Balanced Budget Amendment will do that, making Washington more accountable to the people for the money it spends." [Policy.House.gov, 8/6/11]
Rep. Denny Rehberg (R-MT): "We Likely Would Have Prevented" A Downgrade" "If We'd Tied A Balanced Budget Amendment To The Debt Limit Increase." From a statement on Rehberg's House website:
Every hard working Montana taxpayer knows that your credit score doesn't go down because you can't get your next credit card fast enough. A credit score goes down when you blow through your credit limits. For years, I've stood with hard working Montana taxpayers warning that the consequences of reckless federal overspending were closer than we thought. Well, with $47,000 in debt for every American man, woman, and child, those consequences have arrived. This is a wake-up call to the big spenders with their heads in the sand. Bold action is required. It's time for a balanced budget requirement in the Constitution. In fact, we likely would have prevented this if we'd tied a balanced budget amendment to the debt limit increase like many of us tried to do. [Rehberg.House.gov, 8/5/11]
Rep. Reid Ribble (R-WI): Senator Reid And President Obama "Flippantly" Rejected Cut, Cap and Balance, Which Exceeded S&P Criteria For Deficit Reduction. According to Ribble's House website:
I helped author The Cut Cap and Balance Act which, if enacted, would have reduced the federal deficit by almost $6 trillion over the next decade --well exceeding S&P criteria for serious, legitimate deficit reduction. Our legislation passed the House of Representatives on a bipartisan basis but was flippantly rejected by both Senator Reid and President Obama as being 'draconian.'
In Washington, where some seem to act like rhetoric matters more than facts, spin more than substance, and misdirection more than problem solving, I wonder how the Democrat deficit doubters will react to these S&P analysts. I urge Senator Reid to give Cut, Cap and Balance the full and proper debate that it deserves before our economy veers more dangerously toward crisis. Alarms are sounding for a reason...because our fiscal house is at risk of burning down. [Ribble.House.gov, 8/6/11, italics original]
Rep. Tim Scott (R-SC): With Downgrade, "We Are Seeing The Effects Of The Left's Refusal To Move Forward With Cut, Cap, And Balance." According to a statement titled "Rep. Tim Scott Statement on Standard & Poor's Announcement" on Scott's House website:
The House of Representatives passed the only plan which would have ensured a return to sound fiscal policy. Now we are seeing the effects of the left's refusal to move forward with Cut, Cap, and Balance. Regrettably, the President will again call for raising taxes on Americans. But as you have heard me say time and again, tax policy is counter-intuitive. Tax increases will generate additional revenue for Washington initially, but then will decrease because of the jobs it destroys. Lower tax rates grow the economy, create jobs and gets America producing again. [TimScott.House.gov, 8/7/11]
Rep. Joe Walsh (R-IL): "If President Obama And Democrats In Congress Had Embraced Cut, Cap, And Balance ... This Action By Standard And Poor's Could Have Been Avoided." From a press release on Walsh's House website:
Simply put, if President Obama and Democrats in Congress had embraced Cut, Cap, and Balance and if the President were sincerely focused on the severe financial challenges facing the country instead of his re-election, this action by Standard and Poor's could have been avoided. [Walsh.House.gov, 8/6/11]
Sen. John Cornyn (R-TX): "The Recent Downgrade Reaffirms My Belief That Washington Requires A Straitjacket On Federal Spending, In The Form Of A Balanced Budget Amendment." From a press release on Cornyn's Senate website:
The recent downgrade and the President's track record of failed economic policies only reaffirms my belief that Washington requires a straitjacket on federal spending, in the form of a balanced budget amendment. [Cornyn.Senate.gov, 8/8/11]
Sen. Jim DeMint (R-SC): "Cut, Cap & Balance Would Have Prevented A Downgrade." From a press release on DeMint's Senate website:
The downgrade of America's credit rating is exactly why conservatives fought so hard for a real solution to our debt and spending crisis. Cut, Cap & Balance would have prevented a downgrade, stopped the reckless spending, and balanced our budget within ten years. Instead, Congress and the President invited a downgrade with a status quo debt deal that allows deficit spending to continue indefinitely. [Demint.Senate.gov, 8/8/11]
Sen. Mike Lee (R-UT): In The Wake Of The S&P Downgrade, "Never Has There Been A Greater Need For A Balanced Budget Amendment." From a press release on Lee's website:
U.S. Senator Mike Lee responded to S&P lowering the long held AAA rating for the United States saying, "This downgrade confirms what we have known was coming, but have chosen to ignore, for a long time. This downgrade further confirms that the true threat to our country, our economy and our way of life is our debt and the continued deficit spending Washington and the current administration are pursuing."
For the first time ever the United States does not hold a AAA rating. The impact could be felt in numerous ways including higher interests rates for car, home or student loans along with credit card rates. Lee then stated, "Unfortunately, when it comes to the significant financial challenges this country faces, we have been swatting at the branches and symptoms instead of attacking the root and core causes. Never has there been a greater need for a Balanced Budget Amendment to the Constitution - to ensure we get our fiscal house in order, reduce our debt, and get Washington to live within its means." [Lee.Senate.gov, 8/5/11]
Rep. Candice Miller (R-MI): Passage Of A Balanced Budget Amendment Is "A Serious And Dramatic Step That Should Be Taken Immediately." From a statement on Miller's House website:
We must reduce spending, borrowing and the addition of new debt. It is also time for dramatic action to show investors that the United States is serious about solving this problem. A serious and dramatic step that should be taken immediately is Congressional passage and submission to the states of a balanced budget amendment to our Constitution. Only this action would spur the vigorous national debate that is so necessary to help us deal with our problem of overspending. We must act now. [CandiceMiller.House.gov, 8/6/2011]
S&P: "We Lowered Our Long-Term Rating" Because Of "The Prolonged Controversy Over Raising The Statutory Debt Ceiling." From Standard & Poor's: "We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process. [...]The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy." [Standard & Poor's, 8/5/11, emphasis added]
National Journal: "It's Hard To Read The S&P Analysis As Anything Other Than A Blast At Republicans." From the National Journal: "To be sure, S&P didn't specifically single out Republicans. It criticized the overall $2.4 trillion deal as too limited, and it implicitly criticized both political parties for refusing to tackle their sacred cows - entitlements, in the case of Democrats; tax increases in the case of Republicans. But it's hard to read the S&P analysis as anything other than a blast at Republicans. In denouncing the threat of default as a 'bargaining chip,' the agency was saying that the GOP strategy had shaken its confidence. Though S&P didn't mention it, the agency must have been unnerved by the number of Republicans who insisted that it would be fine to blow through the debt ceiling and provoke a default." [National Journal, 8/6/11, emphasis added]
S&P's "Rationale" Section Cites Failure Of Long Public Debate To Produce Comprehensive Plan That Includes New Revenues. From the "Rationale" section of the Standard & Poor's report: "Despite this year's wide-ranging debate, in our view, the differences between political parties have proven to be extraordinarily difficult to bridge, and, as we see it, the resulting agreement fell well short of the comprehensive fiscal consolidation program that some proponents had envisaged until quite recently. Republicans and Democrats have only been able to agree to relatively modest savings on discretionary spending while delegating to the Select Committee decisions on more comprehensive measures. It appears that for now, new revenues have dropped down on the menu of policy options. In addition, the plan envisions only minor policy changes on Medicare and little change in other entitlements, the containment of which we and most other independent observers regard as key to long-term fiscal sustainability." [Standard & Poor's, 8/5/11, emphasis added]
S&P: Republican Intransigence On Taxes Makes Permanent Extension Of Bush Tax Cuts More Likely, Which Would Be "Consistent With" Downgraded Rating. From S&P: "Under our revised base case fiscal scenario--which we consider to be consistent with a 'AA+' long-term rating and a negative outlook--we now project that net general government debt would rise from an estimated 74% of GDP by the end of 2011 to 79% in 2015 and 85% by 2021. Even the projected 2015 ratio of sovereign indebtedness is high in relation to those of peer credits and, as noted, would continue to rise under the act's revised policy settings. Compared with previous projections, our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act." [Standard & Poor's, 8/5/11, emphasis added]
National Journal: Downgrade Based "On The Political Game Of Chicken...That Republicans Initiated And Pushed To The Limit." From the National Journal: "The big new element on Friday was an official outside recognition that U.S. creditworthiness is being undermined by a new factor: political insanity. S&P didn't base its downgrade on a change in the U.S. fiscal and economic outlook. It based it on the political game of chicken over the debt ceiling, a game that Republicans initiated and pushed to the limit, and on a growing gloom about the partisan deadlock. Part of S&P's gloom, moreover, stemmed explicitly from what a new assessment of the GOP's ability to block any and all tax increases. S&P was remarkably blunt that its downgrade was mostly about heightened political risks: 'The political brinksmanship of recent months highlights what we see as America's governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed,' it said." [National Journal, 8/6/11, emphasis added]
S&P: A Balanced Budget Amendment Would "Diminish The Flexibility Of The Government To Respond" To Fiscal Crises. From the Washington Post:
House and Senate Republicans have rallied around the notion of a balanced budget amendment to the Constitution as a solution to the country's dire fiscal straits. But over the weekend, the head of Standard & Poor's sovereign ratings division dismissed the idea, arguing that it would be more harmful than helpful to the country's creditworthiness.
"In general, we think that fiscal rules like these just diminish the flexibility of the government to respond" to crises, S&P managing director John Chambers told CNN's Wolf Blitzer on Saturday when asked whether it's important that Congress send a balanced budget amendment to the states in order to restore the country's AAA credit rating. [Washington Post, 8/9/11]
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