On Friday, S&P downgraded US debt from AAA to AA+ and we will all suffer as a result. The speed of the downgrade and timing - after a debt deal passed no less - is as curious as the blatant $2 trillion error they made in their calculations. No matter, S&P has a lot to answer for including helping to cause the recession in the first place.
S&P should stand for “stupid” and “preposterous” for how they pumped up debt during the housing boom, contributing heavily to the horrific 2008 meltdown of the global economy. Of course they were not alone as the President, Congress, Federal Reserve (hello Tim Geithner, Alan Greenspan & Ben Bernanke) and every sleazy broker on Wall Street either looked the other way, ignored the obvious, were complicit or profited from the dubious highly rated debt flying around. (And Moody’s is just as much to blame.)
Now we have a debt deal and the framework for more - whether you or I like it or not - yet the US still gets downgraded. I don’t know about you but I smell a rat. While our current debt is high and roughly equivalent to 100% of our annual gdp, our ability to pay it back is not in question. Even more so with the GOP agreeing that we had to pay it back and Obama + some Dems saying we needed to cut future deficits. Yet, like the GOP, S&P didn’t take ‘yes’ for an answer and now has essentially taken the same hostage as our right-wing friends. Cut or else. Economic consequences be damned.
The first downgrade will cause some mild pain. It will pressure the dollar downwards and that sends oil prices up. It will likely mean higher interest rates and that effects nearly everyone with or looking for credit, sucking much-needed cash out of the economy. This is the last thing we need to do right now - especially with the rich getting off scot free - but S&P has spoken. Get your house in order. And it singled out Congress for not working together while noting it expects the Bush tax cuts to be entirely extended. That is worrisome and should give Democrats fodder for an all-out attack on the GOP, not to mention buttress Obama’s argument for ending cuts for the rich.
Meanwhile, we get Nit-Wit Romney and Michele “I Never Done Nuthin’” Bachman crying about Obama’s disastrous handling of the economy and blaming him for the downgrade. Reality is, while Obama should have stuck to his guns and insisted on revenues being included, the downgrade was coming. That is due to two unfunded wars, unfunded Medicare Part D drug plans and the Bush tax cuts. But they are attempting to make hay as they jockey into silly season, aka the GOP primaries.
This all may be the biggest setup in history - corporations sitting on $2 trillion (almost $1 trillion in cash or the equivalent), a do-nothing right-wing Congress and S&P ready to sink the economy. Can you smell a conspiracy among the ultra wealthy leeches and their GOP henchmen, aided by the daft, uninformed suckers populating the Tea Party? Because we sure can. When the head of sovereign ratings shows up on Fox News Sunday, the stink becomes nearly overwhelming.
Fact is, these forces have aligned to an Obama second term at all costs and if the President does not come out swinging now that the GOP is touring the nation’s backwaters that sent it into power, he will be in big trouble in 2012. Then all we’ll have to look forward to is a hefty tax cut and four years of social engineering courtesy of the Christian Right.
By the time the next Dem President arrives in 2016 to fix the mess, it likely will be too late and the GOP will have its wish. A poor banana republic where the rich control everything and pay nothing while impoverished kids and the elderly die in the streets for lack of government services. Yes, the right wing conspiracy is back with big corporate America, the Tea Party and the feckless S&P lending a major assist.