Failure

Congrats.  You’ve managed to do what even Jimmy Carter couldn’t accomplish.

The United States lost its top-notch AAA credit rating from Standard & Poor’s on Friday in an unprecedented reversal of fortune for the world’s largest economy.

S&P cut the long-term U.S. credit rating by one notch to AA-plus on concerns about the government’s budget deficits and rising debt burden. The move is likely to raise borrowing costs eventually for the American government, companies and consumers.

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

Maybe we should have listened to those tea party “terrorists.”

66 Responses to Failure

  • Maybe the Tea Party Terrorists should’ve listened to the Gang of 6.

  • Ouch.

    Kinda been expecting that since our debt went over last year’s GDP, but ouch.

  • Surely John Boehner or Harry Reid deserve the lion’s share of the blame here. Reid for refusing to raise the debt ceiling last year, and handing Boehner the (stupid and reckless) opportunity to destroy our credit rating; Boehner and the Congressional republicans for risking so much for so little – the deal they got addressed none of the underlying issues. Obama is a terrible negotiator, but then its difficult to negotiate with people as reckless as a
    Boehner and the ‘no more revenue, no matter what’ sloganeers.

  • John, are you kidding me? You’re blaming the Congressional Republicans when they’re the only ones that proposed a deal that actually meaningfully cut spending? And you’re blaming the Republicans when President Obama an Harry Reid refused to back that plan?

    You also seem to be implying that one of the reasons S&P downgraded was because we came so close to hitting the deadline, and for that the GOP is to blame. In a sense, yes, the acrimony did indicate to S&P that Washington would not reach a meaningful agreement on serious reform. But to blame Boehner and the tea partiers for that is absurd. S&P clearly wanted serious cuts, and they didn’t get them, and only one side was offering them.

    And speaking of sloganeering, maybe you’d like to write reckless one more time.

  • Actually, Boehner does get some blame – for not standing his ground. Then again, since I was one of the ones backing the deal, maybe I can partially blame myself.

  • Paul-
    last I heard, credit guys didn’t much care about the deal– they’ve been saying for weeks that none of the deals were big enough for them, and the financial experts were pointing out even longer that we wouldn’t actually have to default on our debts– the money coming in was enough to pay for debts, just not for continued spending. (Not that this ever hit the news…)
    I do recall hearing that if Obama would give assurance that, should the US go bankrupt, it would follow normal bankruptcy law and precedent, it would save our rating for now. I never heard of any such assurances being offered. The shafting of GM’s bond holders in favor of the unions apparently left a bad taste in folks’ mouths.

  • Could you imagine how hard it was for Boehner to negotiate with Obama and Harry Reid? Must have been like talking to a brick wall. The Dems deserve a majority of the blame since they refused to even debate on the two bills that passed the House. Cut, Cap, and Balance was the only plan that had a chance of meeting S & P’s standards for keeping our AAA rating – http://washingtonexaminer.com/opinion/op-eds/2011/07/sp-report-vindicates-house-cut-cap-and-balance-plan. Obama is far worse and more radical than Jimmy Carter.

  • Time for a change Mr. Barry O’Bumma, you sunburnt Irishman you. ;-)

  • Great picture.
    Failure is in his marrow.

  • You’re blaming the Congressional Republicans when they’re the only ones that proposed a deal that actually meaningfully cut spending?

    The Gang of Six plan cut spending more than the Boehner plan.

    If you read the S&P report, it’s clear that Congressional intransigence, not insufficient spending cuts, was the reason for the downgrade.

  • Blaming the Republicans in Congress for the credit downgrade is truly laughable. But for the 2010 elections, by now the Dems would have passed stimulus II, sent another trillion dollars down the rathole, and there would be no plan at all for any budget cuts. The simple truth is that most Republicans in Congess do want to make sharp cuts in Federal spending and most Democrats do not want to do anything about Federal spending except to raise taxes and increase it. This credit downgrade is purely the product of the American people placing the Democrats completely in charge of the Federal government from 2008-2010, with completely predictable results.

  • The Gang of Six plan cut spending more than the Boehner plan.

    Which Boehner plan? The original cut, cap and balance plan, or the second one that passed last week?

    If you read the S&P report, it’s clear that Congressional intransigence, not insufficient spending cuts, was the reason for the downgrade.

    That’s rather tortured reasoning. It’s not that Congressional squabbling in and of itself was the reason for the downgrade. The debt ceiling fight only showed that our political branches couldn’t agree to develop the sort of reforms S&P felt we need in order to alleviate the debt crisis. If the debt ceiling had been raised months ago without a peep and with the same lack of substantive reform, it’s pretty obvious that the downgrade would have come.

  • Our economic problems have been created in Washington, by Washingtonians (I called them Washingtwits when I lived and worked there). Entrenched politicians on both sides of the aisle, but most of them Democrats, caused these problems. The banks and mortgage lenders who jumped in headfirst into subprime mortgages share blame, but they often did so at Washington’s insisting that uncreditworthy people (Democrat voting blocks) be given mortgages.

    We never hear anymore how much money gets funneled into FNMA and Freddie Mac to keep them afloat.

    Obumbler has a fixation on the tax cuts passed under the Bush Administration. He wants them gone. He doesn’t care what damage they do, nor do any of Obumbler’s supporters.

    The porkulus bill, the cash for clunkers, the GM and Chrysler bankruptcies, the insidious “health care reform” law……all these things have made a slumping economy worse.

    There are polls after polls showing Obumbler’s approval ratings, how Obumbler would do against Republican ______(fill in the blank) but I think Obumbler is toast.

    Ohio, Indiana, Virginia, North Carolina and Florida all elected Obumbler in 2008. They will not elect him again in 2012. Obumbler may lose more states that he won in 2008.
    Pennsylvania, Michigan, Wisconsin and New Hampshire are possibilities.

    I hope and pray the nation survives until a real leader takes office and Obumbler is banished from Washington forever, and I hope he takes a truckload of Democrats with him.

  • Geithner needs to resign.

    The criminal dem Congress wasted two years (820+ days) without enacting a lawful budget.

    “Cut, cap, and balance” was enacted by the House. It is a start. It needs to be sent up again.

    The Ryan budget passed the House. It should again be presented to the gangster senate.

    Obama’s/Reid’s idiotic debt ceiling debacle (I again repeat myself a couple of times, also too) sets a $10 trillion rise in the national debt over the next ten years as opposed to a $12 trillion rise.

    S&P is making measured judgments on the US capacity to repay (realistically estimated future revenues, expenses, liabilities) according to terms, and (I think) is being liberal in solely dropping the obamidiots’ rating to AA+.

    Obama promised hope and and change. We got it.

    Obama-worshiping ideologues: meet reality.

  • Let me use an illustration to explain this. Imagine that Congress had raised the debt ceiling months ago, and they did so without any action regarding the deficit – you know, the thing that President Obama wanted Congress to do in the first place. Would we have been downgraded then? Almost certainly so.

    Conversely, imagine if there had been the exact same acrimonious fight that brought us to the wire Tuesday. But instead of a fig leaf plan, Congress agreed to substantial cuts that all interested parties agreed weren’t gimmicks. We’ll use the $4 trillion figure that seems to be popular. Would we have been downgraded? Almost certainly not.

    The fight and the politicking weren’t the problem according to S&P. This was all a manifestation of the larger problem, Washington’s inability to meaningfully address the debt issue. In fact, if the debt debate itself were the cause of our downgrade I’d suggest that S&P should not be taken seriously any longer as a financial institution.

    In other words, it was the outcome of the debate and not the debate itself that caused S&P to downgrade us.

  • what even Jimmy Carter couldn’t accomplish.

    Jimmy Carter had the strongest aversion to public sector borrowing of any president in the last 50 years. That is a very peculiar reference.

    Kinda been expecting that since our debt went over last year’s GDP

    For the record, north of a third of the debt is held by the Social Security Administration and the Federal Reserve.

    blaming the Republicans in Congress for the credit downgrade is truly laughable.

    The Republicans were willing to put their cards on the table while the President was being unserious and the Senate majority was tabling and rejecting everyone’s ideas while offering nothing of its own. However, it was an error for the Republican caucus to refuse to consider any tax increase, even one financed strictly by removing deductions and special exemptions. Federal revenue collections (as a proportion of domestic product) have not been this low in decades.

  • Washington’s inability to meaningfully address the debt issue. In fact, if the debt debate itself were the cause of our downgrade I’d suggest that S&P should not be taken seriously any longer as a financial institution.

    Much of that inability can be attributed to the mechanics of the legislative process. However, nowhere in the TEA party discourse do you see any detectable interest in institutional restructuring – quite the contrary, in fact.

  • In other words, it was the outcome of the debate and not the debate itself that caused S&P to downgrade us.

    No, it was both. Don’t take my word for it:

    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. The statutory debt
    ceiling and the threat of default have become political bargaining chips…

    And the Republican’s steadfast refusal to agree to any additional tax increases was a large part of what created the disappointing outcome of the debate. The fundamental problem is entitlements; rather than addressing this, the Republicans chose to threaten U.S. Bondholders with default, convinced the S&P and others that they were completely unwilling to sign off on the revenue increases that will be necessary to meet U.S. obligations, and walked away championing a bunch of minor spending cuts.

    Reckless (and stupid).

  • Face it, America’s doing its Ancient Rome collapse; history always repeat. What’s remarkable is that the USA has last this long. And Lincoln was right: The collapse will come from the vandals within.

  • 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.

    It’s the result, not the process.

    The fundamental problem is entitlements; rather than addressing this,

    Is this supposed to be a joke? Have you been asleep for the past six months? Are you so brainwashed by DNC talking points that you actually are arguing that the GOP didn’t attempt to tackle entitlements?

    Reckless (and stupid).

    So let me get this straight. Obama triples the deficit through reckless (see, I can use that word, too) spending, refuses to enact real cuts to entitlement programs, and yet the GOP is at fault for refusing to agree to tax increases that would barely make a dent in the deficit but could hinder economic recovery efforts.

    Yeah, there’s stupidity here, but it isn’t who you think it is.

  • @John Henry

    Was that from an opinion column or from the actual press release from S & P? Linkage?

  • Are you so brainwashed by DNC talking points that you actually are arguing that the GOP didn’t attempt to tackle entitlements?

    When it came to making a choice between agreeing to revenue increases and addressing entitlements, the Republicans demonstrated which they cared more about.

    Obama triples the deficit through reckless (see, I can use that word, too) spending, refuses to enact real cuts to entitlement programs, and yet the GOP is at fault for refusing to agree to tax increases that would barely make a dent in the deficit but could hinder economic recovery efforts. Yeah, there’s stupidity here, but it isn’t who you think it is.

    In the big picture, there’s stupidity all around – this isn’t a children’s cartoon. It was stupid for Reid not to raise the debt ceiling last year. The Affordable Care Act was unwise given the unsustainable trajectory of Medicare costs. But on this particular issue, the Republicans claim the crown.

    Both parties are afraid to tackle entitlements. But any real reform has to include revenue increases; if you take those off the table at the outset, there will be no reform. Moreover, there was no need to threaten U.S. bondholders with default – and, yes, absent that threat, I doubt we would have been downgraded – without any substantive benefit. Congressional Republicans decided to send the following messages to the financial markets:

    1. We are perfectly willing to default on our obligations to you in order to prevent agreeing to any new tax increases.

    2. We are unwilling to seriously address our structural problems on entitlements unless the deal takes tax increases off the table.

    3. We are so myopic as to jeopardize our rating in exchange for a set of cosmetic and largely irrelevant cuts.

    And the bond markets took those messages as a sign that the U.S. cannot necessarily be relied upon to address its problems. Now, sure you can always say that Obama and the Senate should have just completely capitulated and that, therefore, it’s his fault, but the here’s Mitch McConnell talking about the Republican strategy:

    But at the Capitol, behind the four doors and the three receptionists and the police guard, McConnell said he could imagine doing this again.

    “I think some of our members may have thought the default issue was a hostage you might take a chance at shooting,” he said. “Most of us didn’t think that. What we did learn is this — it’s a hostage that’s worth ransoming. And it focuses the Congress on something that must be done.”

    It appears to me that the lesson here is that some of the hostages (i.e. U.S. bondholders and the rating agencies) didn’t enjoy the experience, and are uncomfortable with what it suggests about U.S. political institutions.

  • The fundamental problem is entitlements; rather than addressing this,

    The federal deficit went from 1.2% of domestic product to 9% in the space of four years. The demographic profile of the population did not change that much in that interval. What you did have was a partial implosion in revenue collections and a large expansion in spending electives.

  • The Democrats are the ones who kept the American people hostage by demanding that there must be tax increases on those who actually earn their own money due to their ideological rigid belief that spreading the wealth makes the world go round. Spreading the wealth only creates dependency on the government – others’ money, taxpayers’ money. Tax revenues equals tax increases, not more profits which Democrats despise which brings in more revenue to the government.

  • For an idea of how we got in this state: the local news has been full of doom and gloom because a local shelter group that runs tent cities in the Seattle area “unexpected lost funding.” From FEMA, the Federal Emergency Management Agency. I was shocked that FEMA was still sending money over here, when the big flooding they had was at least three years back and that was the only big disaster I could think of.
    Turns out that they’d been getting at least $44k a year from FEMA for the past fifteen years for, um, existing, basically. That’s a long emergency. (They lost it because Seattle has an above-average economy, and FEMA raised theirs standards to 10% unemployment to get the money.) The group isn’t very public about what they spend money on, but last year when they were demanding more money from the city of Seattle they mentioned that in August ’10 they were $17k in debt for buying bus tickets for homeless people to get to their shelters. City cut $23k because even an above-average economy isn’t that good.

    (For those wondering: when they made a big announcement that they’d be shutting down all shelters and the tent cities, St. Joe’s Parish donated $50k. They announced that would get them through the end of the week and they might be able to stay a bit longer with more donations. Makes me wonder how much their board gets paid….)

  • When it came to making a choice between agreeing to revenue increases and addressing entitlements, the Republicans demonstrated which they cared more about.

    No, they wouldn’t accept tax increases.
    Big assumption that raising taxes will result in more revenue, especially in the long term.

    Of course, I’d be willing to let tax hikes be called “revenue increases” if we get to call regulations and gov’t agencies “growth restrictions and job destroyers”.

  • The credit downgrade is merely the first manifestation of the government running into the wall of debt that has been created. The status quo of tax, borrow and spend is not long for this world and the party of government, the Democrat party, is going to be in full melt down by the time this process is fully played out. We have two main economic problems in this country: an economy that is flat on its back and a government that has reached the limit of its capacity to borrow without greatly harming our economy. The Obama administration and the Democrats in Congress are completely clueless now that an FDR style New Deal has predictably failed. Another year and a half of futile floundering is the very best that we can hope for from these utter fools.

  • Actually, I think that prior to the war, the Roosevelt Administration was much more circumspect about public sector borrowing than this one. Also, we have no analogue today to the Works Progress Administration and like agencies.

    I suspect the real motor of the President and Reid, et al is a mutually re-inforcing brew of servicing their clientele above all (remember Sen. Harkin’s ‘rallying the stakeholders’? the odious GM deal?), manufacturing ad campaigns (granny over the cliff) and sticking the opposition with the blame for whatever goes wrong.

    The thing is, for the Republican caucus to repair matters (beginning 18 months hence), they have to start thinking and acting like people who make real choices within real constraints and with a sense of the real consequences. They just ain’t there yet.

  • Per capita federal spending Art under FDR increased by 74% from 1933-1940 with almost nothing to show for it in the way of improved economic performance.
    As Secretary of the Treasury Henry Morgenthau wrote in his diary on May 9, 1939:
    “We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong…somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises…I say after eight years of this administration we have just as much unemployment as when we started…And an enormous debt to boot!”

    Obama did not need to create a WPA as government control and involvement in the economy was already much greater in his day than it was in FDR’s time.

    In regard to the Republicans in Congress they understand the big thing that is needed immediately: slashing government spending. That and a rapidly growing economy are the only two things that will end this Great Recession, and the Obama administration is dedicated to keeping government spending as high as possible, and its policies are directly antithetical to robust economic growth.

  • Courtesy the U.S. Bureau of Economic Analysis..

    Change in real gross domestic product, 1933-41: +90.6%

    Ratio of federal expenditure to domestic product:

    1933: 4.1%
    1934: 5.0%
    1935: 4.6%
    1936: 6.7%
    1937: 5.5%
    1938: 6.6%
    1939: 6.5%
    1940: 6.4%
    1941: 14.2%

    Federal budget balance as a proportion of gross domestic product:

    1933: -1.6%
    1934: -3.3%
    1935: -2.6%
    1936: -3.8%
    1937: +0.2%
    1938: -1.5%
    1939: -2.3%
    1940: -0.3%
    1941: +1.7%

    Again, the economy recovered quite nicely. The labor market remained injured. You will notice two surplus budgets in nine years, with no deficit exceeding 4% of domestic product.

  • Imagine that Congress had raised the debt ceiling months ago, and they did so without any action regarding the deficit – you know, the thing that President Obama wanted Congress to do in the first place. Would we have been downgraded then?

    Not according to S&P.

  • Foxfire,

    The Gang of Six proposal would have reduced the top tax rate to 25% while closing loopholes. This was considered to be an outrageous tax increase.

    The debt ceiling fiasco may be one of the greatest unforced errors in American political history. But it’s not too late to make things right. My advice to Republicans who want to get America’s AAA credit rating back is that they get behind something like what Charles Krauthammer proposed yesterday at National Review.

  • Blackadder-
    the Gang of Six proposal did things other than that, as well as (last I heard, about the 20th) having the weakness of not actually being written up for a vote. (Yay, proposal sheet with lots of promises. How unusual!) Did they ever submit an actual bill?

    The proposal had 500B in spelled-out cuts with a promised 1.7T to come later; in contrast, the CC&B bill had 5.8T spelled out cuts. (With the usual weakness that it depends on the next batch of pols changing it.) That the Go6 specifically targeted “discretionary spending” for the big cuts– AKA, “Stay away from entitlements”– was a rather big red flag that it was more of the same, not a change.

    Tax reform is a great idea– I’m all for making the tax code simpler and harder to manipulate for political gain, especially in things like industry specific credits, taxes, rates, write-offs, etc.
    Chances of something changing that passing? About the same as removing the “good” discrimination in federal spending, the EPA becoming sane, or survival rates of a snowflake in a firepit.

    I saw Krauthammer’s article and rather liked it as well. It wouldn’t pass because it would require the Dem pols to weaken the goodie-bag they use to buy votes.

  • This blogpost is collecting folks’ suggestions for why things are so bad right now.

    Lot of it boils down to lack of trust– same problem as with all the promises of $3 in tax cuts for $1 in tax increase and such; fool me once, shame on you, fool me twice….

  • “Again, the economy recovered quite nicely.”

    Considering that the unemployment rate was 15% in 1940 Art, I do not think that is an accurate statement.

    FDR’s large tax increases helped prolong the Great Depression and probably triggered the 1937 Recession in the Depression.

    http://abriefhistory.org/?p=1106

    http://online.wsj.com/article/SB10001424052702304024604575173632046893848.html

  • Considering that the unemployment rate was 15% in 1940 Art, I do not think that is an accurate statement. FDR’s large tax increases helped prolong the Great Depression and probably triggered the 1937 Recession in the Depression.

    Domestic product began to increase rapidly in the spring of 1933. By 1941, levels of output and output per capita were higher than they had been in 1929. (Please note, real output increased by 90% during a run of years when population increased by about 7%). However, there were chronic imbalances and structural flaws in the labor market that you see in countries which have had prolonged periods of unemployment. A more recent and less intense example would be the British experience after 1979. Unemployment rates were at their peak in early 1986, three years after economic growth had resumed. It took over a dozen years for them to return to their antecedent norm.

    One other thing, the 15% classified as unemployed in 1940 included the comprehensively unemployed and those on the rolls of the WPA and like agencies. IIRC, the comprehensively unemployed were more like 7% of the workforce.

  • The Krauthammer plan is the Gang of Six plan reworded. Zero chance the Tea Party will allow it.

  • The WPA had a policy Art of giving one make work job to every family where the breadwinner, almost always the husband, could not find a real job. At its height in 1938 it “employed” three million Americans. It strains credulity to call these individuals unemployed. This was actually a sign of just how bad unemployment was during these years.
    http://online.wsj.com/article/SB122792327402265913.html

    The 15% unemployment rate in 1940 is worse than it sounds due to a much lower female participation in work outside the home than is the case today.

    1941 is a poor date in assessing the New Deal as the massive military buildup for World War 2 was well under way that year. Actually it got under way in 1940 which makes the 15% unemployment rate that year truly stunning.

  • If you will repair to the figures above, federal expenditures as a ratio of domestic product were similar over the period running from 1936 to 1940, but quite different in 1941. IIRC, military conscription was instituted in September 1940.

    Certain things the Roosevelt Administration did exacerbated the trouble in labor markets: an abortive attempt during 1933-35 to impose cartels across the whole economic landscape, attempting to enforce an inflated minimum wage, and promotion of trade and industrial unionism. Things could have been better, but things can still be bad even when the government is promoting flexibility in labor markets. The experience of the Conservative ministries in Britain after 1979 is sadly relevant.

  • The Krauthammer plan is the Gang of Six plan reworded. Zero chance the Tea Party will allow it.

    I suspect just about any Republican inaugurated in January 2013 will find that much of the House Republican caucus is deadweight.

  • Looks like while youse were dithering about taxing evil rich people, tea party terrorists quietly took over Red China.

    The Reds are telling Uncle Sam to spend less on the military and socialist political power purchases.

    N.B., they aren’t shrieking about higher taxes. They’re realists, not ideologues. They want to be repaid and they want a vibrant US market to sell their stuff. Seems Obie and his gangsters don’t share those goals.

  • From the S&P statements before hand and in the downgrade announcement itself, I think Blackadder and John Henry pretty much have this one right: Although there are certainly long term unsustainable issues with US spending in relation to our willingness to raise taxes, we would not have been downgraded a this time except that this episode made it clear that:

    a) Both parties were willing to take us right to the brink of default in order to try to get their way and

    b) Even through this roller coaster ride we didn’t actually get a plan that solves our long term problems at all.

    If the ceiling had been raised quietly without any addressing of the long term issues, we might have been downgraded years hence it we continued on this trajectory, but not now. If we’d had all this brinksmanship but at least some out with a deal that made sure this wouldn’t recur every couple of years, that probably would also have kept us being being downgraded.

    It was the fact that significant parts of both parties were fairly sanguine about voluntarily defaulting, combined with the fact that no significant change in budget trajectory came out of the deal, that landed us where we are.

    (Which, just to be clear, is not yet actually a bad place. We have to get downgraded by two out of three agencies before the sky starts falling.)

  • “If the ceiling had been raised quietly without any addressing of the long term issues, we might have been downgraded years hence it we continued on this trajectory, but not now.”

    I doubt that is correct. S&P was threatening to downgrade the US credit rating back in April unless the US was able to slash the deficit:

    http://www.reuters.com/article/2011/04/18/us-ratings-usa-sp-idUSTRE73H2JT20110418

    The problem here isn’t brinkmanship, but rather that one party in this country can see the nation heading over a fiscal cliff, and the other party is shutting their eyes and pretending that we can go on as we have gone on. We can’t, and I salute the House members of the GOP who have brought a cold dash of reality to this debate.

  • “The Gang of Six proposal would have reduced the top tax rate to 25% while closing loopholes. This was considered to be an outrageous tax increase. ”

    What were the loopholes to be closed?

    “Lot of it boils down to lack of trust– same problem as with all the promises of $3 in tax cuts for $1 in tax increase and such; fool me once, shame on you, fool me twice….”

    What specific speding cuts were promised?

  • ” . . . long term unsustainable issues with US spending in relation to our willingness to raise taxes”

    ROTFLMAO! The S&P down-grade says, “US cannot possibly raise enough tax revenues to repay the planned debt according to term. The credit rating is subject to future downgrade. (See the sixth bullet point in the exec summary). It is impossible. Spending must be reduced.”

    Progressives seem willing to remove the Bush tax cuts for the hated rich. It will not be enough.

    In fact, assume all personal exemptions and all itemized deductions are ended, that effectively raises the Alt. Min. Tax rate for hated rich guys from 26% to 100%; and they raise the marginal tax rate on all personal income over $250,000 to 100%. The overweaning government would realize about three months’ worth of its galactic spending.

    You choose.

    Cornell U. Law Prof Wm. Jacobson:

    “Democrats own the downgrade. They fought Republicans and Tea Party supporters every step of they way, and forced a deal which was insufficient. They played . . . politics against arguments that we needed to drastically change our spending habits.”

    Or, NYT lib lunatic, economic poseur (conscience of a communist) Pavlov Krugman:

    “Yes, it is the madness of the right: if not for the extremism of anti-tax Republicans, we would have no trouble reaching an agreement that would ensure long-run solvency.”

    BARF!

  • What specific speding cuts were promised?

    Exactly. -,-

  • I would counter he is hardly a failure. This is a man who is an ideologically hardened statist whose worldview is that government is the solution to all problems ever encountered by mankind in the history of the world. He is the ultimate example that when you have a hammer, all the world’s a nail.

    Hence his smashing of the US economy with his ideological hammer is in fact a product of intent and design. He has succeeded by this measure, spectacularly.

    It is also why one American patriot followed up Obama’s inauguration with the prescient and impassioned prayer:

    “I hope he fails”.

  • I would point out that the Tea Party Republican’s Cut, Cap, and Balance does not lay out ANY specific cuts. It only lists items that cannot be cut (Medicare, Social Security, VA, and defense). In other words over 80% of the budget is off limits.

    But here’s the real fun part about the Cut, Crap, and Imbalanced bill, it requires a balanced budget cut doesn’t even propose to cut enough to balance the budget. Because it can’t be done. It’s an implicit recognition that taxes need to be raised. And yet the bill also makes it more difficult to raise taxes by requiring a 2/3 majority. Because apparently, taxes are raised too easy as it is.

    The cuts in the bill that actually passed into law is of similar specificity though it doesn’t exempt defense.

    The Gang of Six proposal lists some specifics, most notably cuts to Medicare.

    But all this is pointless. Those told to oppose the Gang of Six plan dutifully did so and will not allow facts to penetrate their heads. And then they wonder why the Tea Party Republicans are the butt of jokes.

  • Any tax reform is DOA. Even the far-right Republican’s own FairTax eliminates deductions so would be unaccepted to the TPR’s. The only way to get tax reform is to exorcize the TPR’s from Congress. Since that isn’t happening anytime soon, we have to concentrate on spending cuts alone for now. Of course, even then our choices are limited. Neither party wants to be the party that cut Social Security or Medicare going into an election.

    I suspect just about any Republican inaugurated in January 2013 will find that much of the House Republican caucus is deadweight.

    The problem is that every Republican candidate except Jon Huntsman has signed Norquist’s pledge which precludes any passable tax reform. No president is going to repeat the mistake of Bush I. Republicans will likely control both houses in 2013 so Obama wouldn’t be able to accomplish much either. Huntsman or bust.

  • Dulce taxes inexpertis.

  • The problem is that every Republican candidate except Jon Huntsman has signed Norquist’s pledge which precludes any passable tax reform.

    For the record, the deal as of 1 July was as follows:

    “All the Republican candidates for president have either signed the pledge or told me they intend to [sign it], with the exception of Huntsman. Huntsman’s staff has told the press he is not signing any pledges. However, they’ve also asked to come and meet with me about stuff in general,” said Grover Norquist, President of Americans for Tax Reform, to me on Thursday.

    You are referring to Norquist’s claims on press release. The only signatures Norquist’s outfit can actually claim at this point are Ron Paul’s (granted four years ago when the fiscal situation was quite different) and Mitt Romney’s. You imagine Gov. Romney’s assurances to Norquist are any more immutable than his assurances to anyone else?

  • RR,
    Don’t confuse Tea Party with Norquist. While latter fights any revenue increase tooth and nail, Tea Party is all about cutting spending with no particular brief on taxes.

  • That may be true of the grassroots but as far as I can tell, any Tea Partier of consequence, is also a Norquistador.

  • “If it were not for the Tea Party, they’d have dropped us to BBB.” Truth from Rick Santelli.

  • From that comment, RR, it is clear that you don’t exactly have your finger on the pulse of the Tea Party because Norquist is far from the most popular figure within the grassroots, and that’s putting it mildly.

  • Tea Party is all about cutting spending with no particular brief on taxes.

    One might hope.

  • Paul Zummo, I said that may be true of the grassroots. But the TPR’s in the House, at the Heritage Foundation, and NRO are Norquistadors.

  • Eh, my reading of NR and Heritage indicates they’re not too crazy about him either.

  • Bah, Norquist is just doing the usual politician thing of hitching his name to a currently popular movement.
    It’s the same way libertarians who don’t personally care about social issues, or who are socially liberal, will insist that the TEA party agrees with them– or at least doesn’t care about social issues.

  • Good find, Don! Guilt by alleged association was so much easier before Al Gore invented the internet.

  • True Jay. We all owe Gore so much! :)

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