Monday’s outlook change by ratings agency Standard & Poors
(S&P) for U.S. federal government debt — going
from stable to negative while affirming the current AAA rating
— brought Democratic responses that would have made George Orwell
proud.
S&P’s rationale is that despite a “high-income, highly
diversified, and flexible economy, backed by a strong track record
of prudent and credible monetary policy” (the latter being a
characterization certainly up for debate), “the U.S.’s fiscal
profile has deteriorated steadily during the past decade.” This
deterioration has led the U.S. to have higher deficit/GDP and
debt/GDP ratios than most other AAA-rated nations and S&P is
skeptical of the ability of Congress and the Administration to
reach agreement as well as the potential of any agreement to have
substantial impact within a few years. Thus
the change in outlook which means at least a one-in-three chance of
the debt rating itself being lowered within two
years.
House Minority Whip Steny Hoyer (D-MD), aiming for a gold
medal in logical gymnastics, interpreted S&P’s warning about
potentially unmanageable debt as meaning that “Republicans cannot
hold the debt limit hostage over partisan, divisive issues” (such
as reducing government spending, apparently).
White House Press Secretary Jay “Anyone but Gibbs” Carney
chimed in similarly: “The issue here is the debt ceiling has to be
raised.”
And far-left Representative Peter Welch (D-VT) reiterated
a call he made on Friday in a
letter that 114 House Democrats signed calling for “a
Democratic position in favor of a clean
extension of the debt ceiling” by which Welch means allowing the
U.S. to borrow more money without requiring any progress on
spending cuts (or even the Democrats’ favored tax increases) to
reduce ongoing deficits.
One might have been tempted to debate the Democrats using
(wait for it!) logic to explain that taking on more debt hardly
seems like the first best step toward dealing with concerns that
the nation has too much debt. But we don’t even have to resort to
such below-the-belt tactics as reasoning to dispense with
Democrats’ arguments. Instead, we can listen to S&P
themselves. In a “FAQ”
about their outlook change entitled “A Closer Look At The Revision
Of The Outlook On The U.S. Government Rating,” S&P offers this
Q&A, which not only lays waste to every Democrat claim above
but also to their ongoing boy-crying-wolf pleas about the “full
faith and credit” of the U.S. government being at risk in this
debate:
Do the debates about passing Congressional
continuing resolutions or raising the debt ceiling influence your
decision to revise the outlook?
The congressional debates did not, by themselves, prompt
us to revise the outlook. But we believe that these debates do
highlight the political challenges in reducing the U.S.’s
government’s fiscal deficit. That said, we do not expect the U.S.
government to default because of a Congressional refusal to
authorize the government to borrow additional funds.
Others on the left, including the Democrats’ useful idiots in
the media, gunning perhaps for the silver medal after Steny Hoyer’s
performance, are desperately seeking other ways to use S&P’s
revision to attack Republicans and particularly House Budget
Committee Chairman Paul Ryan’s budget plan which passed the House
on Friday.
The Washington Post blogger
Ezra Klein looks to blame Ryan for — well, for everything from
disagreement to deficits to dead senior citizens — by trotting out
the Democratic talking-point-du-jour that Ryan’s plan “cuts taxes
and makes sweepingly ideological changes to Medicare and Medicaid.”
Ryan’s plan cuts tax rates. But by eliminating loopholes
and deductions it is intended to be revenue neutral; it
specifically does not cut taxes. As for changes
to Medicare and Medicaid, if it is “sweepingly ideological” to
propose the first serious plan in decades that might allow market
forces to nudge down health care inflation and keep these
entitlement programs from bankrupting the nation, then I (and I
presume Paul Ryan) plead guilty.
But then Klein is known for saying that Senator Joe
Lieberman’s early opposition to Obamacare meant that Lieberman was
“willing to cause the deaths of hundreds of thousands of people,”
so why anybody other than DailyKos readers and MSNBC viewers would
find him credible is beyond me.
Slate’s David Weigel offers
his own version of moral equivalence by omission: “Left unsaid
here (by S&P) are the inconsolable issues: Republicans won’t
give on tax increases, and Democrats won’t give on entitlements.”
Weigel thus implies that the Republican and Democrat intransigence
on their particular issues are economically and morally equivalent.
This despite it being rather obvious (both from data and from
common sense) that no amount of tax increase will prevent
entitlements from bankrupting the country. And further that tax
increases take the earnings of citizens while refusing to reform
entitlements redistributes those earnings to others based on the
fundamentally Marxist premise that the others “need” it more.
(That’s the same premise a mugger might use to redistribute your
income.)
But then Weigel is the guy who had to resign from the
Washington Post after insulting Republicans, calling Matt
Drudge an “amoral shut-in,” and suggesting that the media is wrong
to air “‘real American’ views, no matter how f***ing moronic.”
(Weigel’s favorite expression to denigrate Republicans is not fit
for publication on these pages, but if you’re interested you can
find it
here.) So, why anybody other than Keith “nothing better to do
these days” Olbermann would find Weigel credible is beyond
me.
Democrats, who are so fond of arguing that the U.S.
should be more like Europe, might look at S&P’s analyses of
certain foreign economic policies. In particular, both the UK and
France have implemented budgets that border on being “austerity
plans”; indeed S&P called France’s an “austerity program.” In
both cases, S&P believes the plans will reduce those country’s
deficits primarily through the discipline of reduced government
spending, though both countries did implement tax hikes as well.
You know the tide has turned against government’s being all things
to all people when even the French favor
spending cuts over tax increases by 80% to 8%, according to a
recent poll by the Economist. And Canada, which unlike the
U.S. substantially decreased the size of its government relative to
GDP in the 1990s, is expected to “return to (a deficit) of less
than 0.5% of GDP by 2013.”
In other words, while not taking a position on the
relative merits of tax hikes and spending cuts, and even with a
passing shot at the Bush tax cuts, S&P’s examples of successful
tackling of deficits are nations that have cut or are cutting the
cost of government far more than they’re digging deeper into their
citizens’ pockets.
Moody’s, another key ratings agency, reacted to S&P
with a very different take on the current political debate over the
federal budget: “This potential change in the direction of fiscal
policy is credit positive for the U.S. federal government (Aaa
stable), although it remains uncertain what sort of budget will
actually be adopted.” Anyone want to bet on when you’ll hear a
liberal giving Paul Ryan credit for that?
