Cause & Effect

What caused the United States to lose its AAA rating for the first time in 94 years, a rating that withstood two world wars, the Great Depression and (most of) the Great Recession, and a costly military buildup that bankrupted and demolished our Cold War foe, the Soviet Union, without a direct shot fired?  Was it the dastardly Tea Party, with its demands for fiscal sanity and a solution to an oncoming tsunami of entitlement liabilities?  According to the man who rates sovereign debt for the agency that downgraded the US, not really:

The head of Standard & Poor’s sovereign ratings, David Beers told “Fox News Sunday” he did not expect “that much impact” when global markets open on Monday due to what he called a “mild deterioration” in the U.S. credit standing to AA-plus from top-tier AAA. …

He also said the downgrade announced on Friday was not due to the budget positions of any political party and that on any future agreement, “We think credibility would mean any agreement would command support from both political parties.”

So a lack of consensus was part of the problem for S&P.  But consensus about what?

Beers called the U.S. Treasury Department’s criticism of the credit rating agency’s analysis a “complete misrepresentation.” Even with the debt limit agreement passed by Congress, he said, “the underlying debt burden of the U.S. is rising and will continue to rise over the next decade.”

Actually, the Tea Party caucus in Congress had it right.  The bond raters needed to see the US take a significant step towards ending deficit spending and getting future liabilities under control.  The problem with the lack of consensus came from the resistance of Democrats to the fiscal realities of the situation we face.  Instead of addressing the real problems, Democrats blocked any attempt to deal with the entitlement crises and would only agree to address discretionary spending.

I mentioned this as an aside in my earlier post, but it bears repeating here.  Republicans cut the only deal they could get without control of the Senate and the White House.  Had they refused to take that deal, then S&P and likely Moody’s would have lowered the rating on Wednesday, and Republicans would be taking the blame.  Instead, this clearly shows that Democratic refusals to deal rationally with the entitlement crises are the reason for the decline in confidence in the US.

Call it a clarifying moment.  Discretionary spending was and is a sideshow to what concerns rational investors.  We could eliminate every cent of discretionary spending — defense, homeland security, education, welfare — and we’d still be adding $300-400 billion a year to our deficit through fixed entitlement spending.

Want to see why it’s the debt and not the taxes, Tea Party, or Congressional tiddlywinks?  Heritage’s chart showing the growing bite from entitlements in the future demonstrates the problem quite clearly:

As for the political elements of the downgrade, they’re real — but it’s not the politics of the Tea Party that are the problem.  To follow up my point in my previous post, note well how ObamaCare’s “entitlement reform” impacts the problem and “bends the cost curve.”  The invariable end is a massive amount of liabilities that a free economy cannot possibly honor.

Janet Daley draws the proper conclusions, writing that both Europe and the US are currently proving that nanny-state structures cannot coexist with free economies in the long run.  Inevitably, people have to choose between the command economies required by burdensome entitlement programs or free economies and personal responsibility:

We have arrived at the endgame of what was an untenable doctrine: to pay for the kind of entitlements that populations have been led to expect by their politicians, the wealth-creating sector has to be taxed to a degree that makes it almost impossible for it to create the wealth that is needed to pay for the entitlements that populations have been led to expect, etc, etc.

The only way that state benefit programmes could be extended in the ways that are forecast for Europe’s ageing population would be by government seizing all the levers of the economy and producing as much (externally) worthless currency as was needed – in the manner of the old Soviet Union.

That is the problem. So profound is its challenge to the received wisdom of postwar Western democratic life that it is unutterable in the EU circles in which the crucial decisions are being made – or rather, not being made. …

We have been pretending – with ever more manic protestations – that this could go on for ever. Even when it became clear that European state pensions (and the US social security system) were gigantic Ponzi schemes in which the present beneficiaries were spending the money of the current generation of contributors, and that health provision was creating impossible demands on tax revenue, and that benefit dependency was becoming a substitute for wealth-creating employment, the lesson would not be learnt. We have been living on tick and wishful thinking.

And Daley hits the nail on the head over who exactly has been irrational and radical in this debate:

The hardest obstacle to overcome will be the idea that anyone who challenges the prevailing consensus of the past 50 years is irrational and irresponsible. That is what is being said about the Tea Partiers. In fact, what is irrational and irresponsible is the assumption that we can go on as we are.

Exactly — and that’s exactly the point S&P made with its downgrade.

Update: If we don’t stabilize and reduce our long-term liabilities soon, we’ll get downgraded again, says S&P:

The credit rating agency’s managing director, John Chambers, tells ABC’s “This Week” that if the fiscal position of the U.S. deteriorates further, or if political gridlock tightens even more, a further downgrade is possible.

Chambers also said Sunday that it would take “stabilization and eventual decline” of the federal debt as a share of the economy as well as more consensus in Washington for the U.S. to win back a top rating.

He puts the odds of another downgrade at 3:1.  I’d call it even money, at least while Democrats continue to blame the Tea Party for, er, wanting to do exactly what S&P demands. (Hot air.com)

That or George Bush…oh, and now they are the “victim” of S&P. That’s always the best way to take responsibility for your screw-ups and learn from them… 😦

 

Pissed off!

I am so Pissed off right now I think I could chew through adamantium!

The first downgrade in America’s credit rating happened at the last second of the business week yesterday and you know that both parties, but most especially the Democrats are strategizing on who to blame (the other guy) for this turn of events that could easy hurt every single american alive and to come.

They aren’t really worried about doing anything substantial about the problem that led to this. They are all on holiday after successfully managing to fix the political problem they got themselves into. That was the “debt deal” made on Tuesday.

They just don’t have the maturity or the political will do deal with the ACTUAL problem.

And the Democrats and their Media apparatchiks are already denying it’s anyone’s fault but theirs.

And the Republican haven’t got the balls to deal with it. They caved last week.

So the Titanic has now struck the iceberg that was in full F*cking View. But it’s not their fault!

It’s the Rightwingers!

It’s The Left Wingers!

It’s The Tea partiers!

It’s Bush’s Fault!

And the American people are just as immature. They can’t handle the truth either.

And the ones that can, they’ll be to blame for it because they bring it up.

Ignorance is Strength! Ignorance is Bliss!

And “The Other guy” Is an Asshole!

And above all, it doesn’t “feel” right!

AAAAARRRRGGGHHH!!

The self-delusions and the hyper-partisanship is so out of control I’m not sure there is any hope left.

Obama and his policies can’t possibly be to blame. After all, as the Left maintains all the Spending he’s done is because of all of Bush’s Spending!

It can’t possibly be their fault!

And not enough Republicans own up to the problem either.

So ultimately, the people who are yelling “It’s the Iceberg Stupid!” are going to be to blame as the ship of state sinks and takes everyone with them.

And the idiot sheep will believe them.

AND THAT PISSES ME OFF!

The ratings action immediately fueled partisan wrangling Friday night. Allies to President Obama said it underscored his call for a “grand bargain” that would trim $4 trillion from the federal budget involving a mix of tax revenue and spending cuts.

Do now the Republicans will be blamed for it because they didn’t heed President Obama’s call for a “grand bargain” and the Liberal Media will beat us to death with this Talking Point.

Only problem is, there was a “grand bargain” on the table (actually two if you count the Ryan Budget) but the Democrats demagogued it as trying to throw “grandma off a cliff” and trying to “kill Medicare” and “well, if we don’t have more revenue we won’t be able to pay Social Security and Medicare” and all the other extortions they trotted out.

So it was the Republican’s fault for proposing a grand bargain, then after the downgrade it was the Republicans fault for agreeing to Obama’s version of it (which he never actually proposed by the way- speeches are not legislation).

So we’re all damned if we do and damned if we don’t. But at least it’s not anyone’s fault!

In short, the Democrats will blame the Republicans for the downgrade for not agreeing to the “grand bargain” THEY REFUSED to even vote on or consider!

And the Liberal media will trumpet this to the highest.

And stupid people with very short memories will buy it!

And the Republican will whine and complain. But no one, certainly no one in the Liberal Media will care about the Actual Truth.

And certainly not CUT SPENDING!

They’ll only care about the politics of it all!

The Drug Addicts just OD’d and we all get hammered.

Mind you, Standard & Poors itself is far for Lilly white and godly since they refused to deal with the fake credit run (Fannie and Freddie and Co.) up that led to all this.

So everyone is to blame, but no one will take it. No one is mature enough to face reality.

It will be given to those who pointed it out — The Tea Party.

And everyone will vent on them.

And it will “feel” good.

Meanwhile, the ship continues to sink.

4/19/11: Treasury Secretary Tim Geithner said Tuesday there is “no risk” the U.S. will lose its top credit rating amid a new analysis that revised its outlook on American debt to “negative.”

Well, as usual, Turbo Tax was wrong. But don’t expect the liberal to remember. Hell, they can’t even remember Obama’s Civility Speech in Tucson 7 months ago when they call people who disagree with them “terrorists”.

So let the Blame game commence!

And everyone will argue that the house is on fire but they are not to blame and no one is going to do anything real about it. But at least it won’t be their fault!

So get ready for the Solution: Spend More and TAX everyone more!

After all, it’s Bush’s Fault! 🙂

“If you want a vision of the future, imagine a boot stamping on a
human face – forever.”–George Orwell

Welcome to Hell.

Political Cartoons by Steve Kelley

Political Cartoons by Henry Payne

Political Cartoons by Bob Gorrell

Political Cartoons by Henry Payne

Political Cartoons by Glenn McCoy

 


The Little Neros

“What we now have is a very stark choice,” Obama told a group of about 50 donors at a Chicago restaurant called MK. “Under their vision, we can’t invest in roads and bridges and broadband and high-speed rail. I mean, we would be a nation of potholes, and our airports would be worse than places that we thought — that we used to call– the Third World, but who are now investing in infrastructure.”  (That’s called spending…)

At an another appearance, Obama said: “The speech I gave yesterday [Wednesday] was not a partisan shot at the other side. It was an attempt to clarify the choice that we have as a country right now.”

“I think it’s fair to say that their vision is radical. No, I don’t think it’s particularly courageous.”

But raising taxes is courageous? That’s what Democrat desperately want to do. So they can spend EVEN more! 😦

Meanwhile, Standard & Poor’s Ratings Service downgraded its outlook Monday on U.S. government debt, expressing unprecedented doubts over the ability of Washington to bring the massive federal budget deficits under control.

The agency lowered the long-term outlook to “Negative” from “Stable,” saying there is a one in three chance the United States could lose its top investment rating on its debt in the next two years.

The International Monetary Fund has just dropped a bombshell, and nobody noticed.

For the first time, the international organization has set a date for the moment when the “Age of America” will end and the U.S. economy will be overtaken by that of China.

The Obama deficit tour

The Wall Street Journal’s Steve Moore critiques the president’s speeches attacking Republican budget plans.

And it’s a lot closer than you may think.

According to the latest IMF official forecasts, China’s economy will surpass that of America in real terms in 2016 — just five years from now.

Put that in your calendar.

And if Obama is re-elected, make it sooner I’d bet. He and the Democrats are incapable of cutting spending. They live to spend money.

It provides a painful context for the budget wrangling taking place in Washington, D.C., right now. It raises enormous questions about what the international security system is going to look like in just a handful of years. And it casts a deepening cloud over both the U.S. dollar and the giant Treasury market, which have been propped up for decades by their privileged status as the liabilities of the world’s hegemonic power.

According to the IMF forecast, whoever is elected U.S. president next year — Obama? Mitt Romney? Donald Trump? — will be the last to preside over the world’s largest economy. (WSJ)

The Visigoths have sacked Rome and the little Nero’s are still fiddling! 😦

Astroturf 2011-2012

If video of angry constituents haranguing members of Congress over healthcare reform captured the tone of that policy debate, Democrats and their allies hope that similar clips will emerge in 2011 to define the coming battle over Medicare and entitlement reform.

Left-leaning groups pushed the idea last week that Americans all over the country are outraged at Republican legislators and have been confronting them at town halls to voice their opposition.

In emails and press statements, Democratic organizations have trumpeted examples of town-hall meetings where Republican legislators were criticized by constituents.

“Even Chairman Ryan’s constituents don’t approve of his plan to deliver tax breaks to the wealthiest Americans while ending Medicare,” the email read. “At a recent town hall in Wisconsin, Chairman Ryan was booed as he defended his budget’s continuation of low taxes for the richest people in our country.” (DC)

The fact this is a lie doesn’t matter. Liberals will say anything to win. The truth is almost never included.

Say or do anything to win.

And the Republicans are still trying to be ‘gentlemanly’ while the Democrats will use doomsday weapons at the drop of a hat–Any Hat. It doesn’t even need to be a hat for them to go all out.

One attendee at a townhall already has the talking point down, “Did you not vote for Paul Ryan’s bill?” the attendee asked. “Well, that is to abolish Medicare and give people some money. It will not be the Medicare that we know.”

So when did you stop beating your wife?

In a town hall event on Wednesday held by Rep. Lou Barletta (R-Pa.), an audience member was removed after she became loud and disruptive.

Moveon.org sent an email to residents in Barletta’s district asking them to attend the congressman’s town hall to “ask the congressman why he voted for a budget that that puts millions of seniors, children, and people with disabilities at risk of losing their health care, so we can give millionaires trillions in tax cuts.”

Meaning  let Rome burns and the Democrats will supply the Marshmellows.

It’s not like they care about anything but winning.

Astroturf sales are about to skyrocket!

Meanwhile, the end is nigh. Rejoice.

Liberals hate declaring victory, because “crisis” is the lifeblood of activist government. But when it comes to poverty among the elderly, they really should take a bow.

In 1965, about 30% of seniors lived in poverty. By 2000, that number had fallen to 10%, a two-thirds decline. By 2009, the poverty rate for seniors had risen somewhat (thanks to the recession and financial crisis), but it’s still half the poverty rate for children, and about 20% less than for adults 18-64.

This makes sense: We accumulate education, wealth and property as we age. For that reason, seniors have much higher net wealth than their younger counterparts. But while entitlement programs have undoubtedly helped alleviate poverty among the elderly, they are unsustainable as currently structured.

This is because current tax revenues (from working Americans) pay for today’s retirees, and far fewer working Americans exist relative to retirees than in the old days. In 1950 nearly 17 people worked for every Social Security recipient. In 2009 the number was three. In 2040 it’ll be two.

We’re also collecting benefits much longer than originally anticipated.

Life expectancy for seniors in 1965 was just under 70 years. Now it’s close to 80, meaning that instead of paying for five years of Medicare benefits, Americans pay for 15.

Baby boomers retiring today will receive far more in Medicare benefits than they ever paid in taxes. Researchers at the Urban Institute project that a married 66-year-old couple paid $110,000 in Medicare taxes, but will receive about $340,000 worth of benefits.

So what if paying out 3 times what you put in over the next 20 years is completely unsustainable Liberals don’t care.

Economics bores liberals.

“Armageddon” excites them.

Only when the true armageddon comes, they will not be to blame. They will be as pure as the driven snow, and the news media will say s so over and over again.

FEAR IS HOPE!

FREEDOM IS SLAVERY

IGNORANCE IS STRENGTH

Rejoice citizen, the politicians of both parties are looking out for you…. 🙂