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The Spectacle Blog
Okay, President Obama. Here is the solution to the rating service conundrum: get rid of them. The S&P is not a divinely established entity. It is owned by the publisher, McGraw-Hill. Who in its office does the “rating”? Anybody know? We know this: the first figures provided by S&P to the treasury department contained a 2-trillion dollar error! It was corrected and then the S&P downgraded America’s rating from triple A to double A-plus, an act described by Secretary Geithner as evincing “terrible judgment.”
Stockholders are paying for the S&P judgment in a big way. The Dow Jones closed down 634.76.
Secretary Geithner had intended to leave his Washington job and return to New York City, but he relented at Obama’s urging and announced he is staying on as Secretary. So, here is the solution:
President Obama and Secretary Geithner hold a joint conference-announcement in the White House and declare the S&P “null and void” — no longer applicable to the nation’s credit rating. Uncle Sam has always paid his debts, they point out, and will continue to do so. Ditto for the other rating services. Who needs them? Who appointed them? True, the banks will miss that triple-A stamp affixed to various sheets of paper as signs of worthiness, but heck, they can attest to the validity of their crap themselves without the mystery attachment.
This announcement will serve an ancillary purpose: it will respond to the growing belief that Mr. Obama is weak, a patsy, a plaything for the various components of the U. S. Congress. It will reassert his authority.
And the upcoming 12-member commission assigned the job of rounding out the Debt Ceiling measure will have yet more power — authority to endorse the President and Secretary’s abandonment of the concept of unknown sanctifiers of the U.S. obligations. The word of the United States should be, and is, enough. Always has been and always will be.
View all comments (8) | Leave a comment
More Blog Posts by Reid Collins
http://spectator.org/blog/2011/08/09/sp-solution
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A. Doer| 8.9.11 @ 11:11AM
It was a $2 trillion cumulative error over ten years. It's a big number but the analysis involved even bigger numbers, so that correcting the error didn't change the fact that we're spending way more than we're taking in and the spending is growing faster than the revenue.
Furthermore the main reason for the downgrade isn't that we're sinking in debt, but that we're sinking in debt and gridlock is preventing any real solutions. Each side wants to make symbolic votes to appease the most radical parts of their constituency, without actually passing anything.
Pete| 8.9.11 @ 11:31AM
"Each side wants to make symbolic votes to appease the most radical parts of their constituency, without actually passing anything."
Except that for the Dems, ANY cut is deemed radical, save mythical ones on growth projections over a 10yr time horizon.
A. Doer| 8.9.11 @ 11:33AM
Except that for the Dems, ANY cut is deemed radical, save mythical ones on growth projections over a 10yr time horizon.
And for the Reps, any tax increase is deemed radical. So what you end up with is gridlock. Hence the downgrade.
Tom Osterman| 8.9.11 @ 11:56AM
"The word of the United States should be, and is, enough."
Except, thanks to the Democrats and liberal/moderate Republicans, it isn't anymore. Worse than squandering our treasure, they've squandered trust in the U.S.
A. Doer| 8.9.11 @ 12:07PM
thanks to the Democrats and liberal/moderate Republicans
Funny, since S&P specifically pointed to Republican unwillingness to consider tax increases that would increase revenue as one of the reasons for the downgrade. That's not the liberal/moderate Republicans they're talking about there.
wally| 8.9.11 @ 1:39PM
Tax increases don't increase revenue over any sustained term. Well structured decreases, on the other hand, do.
A. Doer| 8.9.11 @ 1:51PM
That's just silly. Whether or not a tax increase increases revenue depends on the current tax rate, among other factors. Sometimes a tax increase increases revenue. Sometimes it decreases revenue. Sometimes a tax decrease increases revenue. Sometimes a tax decrease decreases revenue.
What S&P wants to see are revenue-enhancing tax increases AND significant cuts to entitlements. Tea Party Republicans are blocking the former, and Democrats are blocking the latter. S&P wants to see both, and have said there could be another downgrade otherwise.
TexasMom2012| 8.9.11 @ 3:25PM
S&P stated in their downgrade report that the downgrade would not have been necessary if the Ryan plan had been enacted. IOW, Reid who wouldn't even allow a vote on Ryan's budget actually forced S&P to downgrade our debt. The Senate hasn't passed a budget in years! I don't blame S&P in the slightest. Congress was repeatedly warned and it was the Dems who refused to take action.