Now that America's Credit rating has been down graded, everyone will be pointing fingers over who is to blame. I think when everything comes to light everyone will agree that it is all Grover's Fault. Let me explain.
Grover Norquist since 1986 has been coercing Republicans to sign a pledge to never raise taxes for any reason. He enforces this pledge by cutting off the flow of money to those who don't sign and uphold the pledge, and by recruiting and supporting challengers to those who don't tow the line.
http://www.washingtonpost.com/how-grover...All but 13 of the Republicans in Congress and most of the Republican Governors have signed the pledge.
It doesn't matter if we have wars, national disasters, economic catastrophes, almost all Republicans have promised not to pay for any of these things.
That is the real reason we have a debt problem. It isn't that we have a spending problem. Our infrastructure is crumbling, our schools are in trouble and our students not able to compete. We are laying off police, firemen, and releasing prisoners, and we can't compete in research and development or encourage the high tech green jobs.
The problem is that the Republicans took a budget surplus, and then started two wars, doubled military spending, give the drug companies billions in Medicare part B, and then gave the rich huge tax cuts, and didn't pay for any of it. The doubling of the National Debt is all because Republicans had pledged not to pay for their purchases, and instead just put it on the credit card.
Then their policies resulted in an economic meltdown which further reduced revenue by 25%. It is clear to all economists that we have a revenue problem, not a spending problem, but the right has an effective propaganda machine that convinces people that black is white and up is down.
During World War Two, the Korean War, the Vietnam War and much of the cold war, we were able to maintain our AAA bond rating by raising taxes on the rich to 90%. When Bush started two wars he reduced the effective tax rates on the rich to 17%.
http://www.creators.com/opinion/mark-shi...Since then gap between the rich and the rest of us have grown to obscene amounts. At the same time 2/3rds of corporations pay no taxes at all. Corporations used to pay 28% of our bills now they only pay 1/6th of that.
http://failedempire.wordpress.com/2011/0...Now the Republicans have made an ideological stand to maintain this unfair class warfare, and to try to starve the beast until the government can no longer protect or help the people at all.
All of the economists told the Republicans that messing with the debt ceiling extension was playing with fire, that it would cause uncertainty in the markets and a drop in consumer confidence. They were told that it would result in disaster, but they were willing to risk destroying the nation economically, because their main goal was to defeat Obama, and they know that even if the Republicans destroyed the economy, Obama will be blamed for it.
For the first time in the history of S&P the United State's AAA bond rating has been reduced. This will lead to higher interest rates which will mean higher house payments which will slow down our economy even further and cost thousands of jobs. This also means that the interest on the National Debt will probably also increase. Now rates are at historic lows. This year we will pay about $500 billion just for the interest on the debt. If Treasury bills go from their current rates of less than .1% to just .2% Interest, then the current $500 billion would double to a Trillion dollars.
http://www.washingtonpost.com/blogs/poli...This entire debt ceiling fiasco which caused the downgrade was entirely preventable. This entire downgrade was a Tea Party inflicted wound. The debt ceiling extension which until now was a simple bookkeeping exercise which has been done routinely 77 times, had been held hostage for purely ideological reasons. It was to protect the Republican pledge not to raise taxes for any reason.
Most economists and 2/3rds of the American people thought a balanced approach to reducing the debt should include budget cuts and tax increases to the rich. But the Tea Party and indeed all of the Republicans refused to raise any revenue at all, or even to cut wasteful subsidies to oil companies that are making record profits. Most Tea Party members of the House declared that they would not vote for an extension of the debt ceiling for any reason.
In its statement, S&P said that it had changed its view "of the difficulties of bridging the gulf between the political parties" over a credible deficit reduction plan.
S&P said it was now "pessimistic about the capacity of Congress and the administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government's debt dynamics anytime soon."
In other words S&P knows that it is impossible to pay off the debt without revenue increases, and the intransigence of the Republicans means that unless they change their mind about no new taxes, than there is no chance that we can get our fiscal house in order.
The Republicans have drawn an ideological line in the sand. All of the debt must be paid on the backs of the poor and the middle class, and the rich and the corporations will never be asked to share in the belt tightening.
S&P knows that this is nonsense. The poor and the middle class are already suffering too much. That is why there is no demand and why the economy isn't recovering.
S&P knows that even if ALL social programs are eliminated that it still wouldn't balance the budget. The only way to balance the budget and start paying off the National Debt is if the people with 90% of the money in the country start paying their fair share.
Because the Tea Party was willing to destroy the nation's economy to protect tax cuts for the rich, our debt will probably be increased $5 trillion in 10 years because the interest on the debt will double. Because the austerity programs the Tea Party insisted on, will slow down the economy and cause another recession, It may cause another $5 or $10 trillion to be added to the National Debt because there will be less people paying taxes and more people dependant on government services. But that is OK because the ideological Tea Party radicals were able to coerce $2 trillion in cuts to social programs.
Thanks Grover!