Republican Presidential Canidate Michele Bachmann Questions Obama Admin.After Agency Downgrades U.S. Credit Rating

(CNN) -- A day after Standard & Poor's rating agency downgraded the U.S. credit rating to AA+ from its top rank of AAA, there were more questions than answers Saturday about what effects the move will have on the economy and American consumers.
The move by S&P, one of the leading credit rating agencies, came just days after Congress approved a deal to deliver $2.1 trillion in savings over the next decade. The deal followed heated debt-ceiling talks in Washington.
"The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics," S&P said Friday shortly after markets closed.
While was unclear what the short-term impact of the credit rating downgrade would be, some initial answers were expected Monday when the stock market reopened.
One area of concern is whether a downgrade would ward off investors from buying U.S. debt and increase the country's cost to borrow money, therefore increasing consumer interest rates on everything from mortgages to car loans to student loans.

"Only time's going to tell how we're going to be affected," former U.S. Comptroller General David Walker told CNN's Anderson Cooper. "Interest rates that affect the U.S. government ultimately can ripple throughout the economy, which is not good news given our weak economic condition already."
Rating agencies such as S&P, Moody's and Fitch analyze risk and give debt a grade that is supposed to reflect the borrower's ability to repay its loans.
The safest bets are stamped AAA. That's where U.S. debt has stood for years. Moody's first assigned the United States a AAA rating in 1917.
Fitch and Moody's, the other two main credit ratings agencies, maintained the AAA rating for the United States after this week's debt deal, though Moody's lowered its outlook on U.S. debt to "negative."
A negative outlook indicates the possibility that Moody's could downgrade the country's sovereign credit rating within a year or two.
John Chambers, the head of sovereign ratings at S&P, told CNN that the political brinkmanship over the debt ceiling proved to be a key issue, with "the U.S. government getting to the last day before they had cash-management problems."
Few governments separate the budget process from the debt-authorization process as the United States does, he noted.
And, though the budget deal that finally was reached will deliver at least $2.1 trillion in savings over the next decade, that will not suffice, he said. "It's going to be difficult to get beyond that -- at least in the near term -- and you do need to get beyond that to get to a point where the debt-to-GDP ratio is going to stabilize."
Asked who was to blame, Chambers said, "This is a problem that's been a long time in the making -- well over this administration, the prior administration."
Congress should shoulder some of the blame, he said. "The first thing it could have done is to have raised the debt clinging in a timely manner so that much of this debate had been avoided to begin with, as it had done 60 or 70 times since 1960 without that much debate."
Chambers added that his agency's decision is likely to have a long-term impact. "Once you lose your AAA, it doesn't usually bounce back," he said.
He pointed to the decision by Congress about whether to extend the 2001 and 2003 tax cuts as one crucial area. "If you let them lapse for the high-income earners, that could give you another $950 billion," he said.
U.S. Treasury officials received S&P's analysis Friday afternoon and alerted the agency to an error that inflated U.S. deficits by $2 trillion, said an administration official, who was not authorized to speak for attribution.

The agency acknowledged the mistake, but said it was sticking with its decision. The administration official called it "a facts-be-damned decision ... Their analysis was way off, but they wouldn't budge."
But Chambers defended his agency's move. "It doesn't make a material difference," he said. "It doesn't change the fact that your debt-to-GDP ratio, under most plausible assumptions, will continue to rise over the next decade."
Rumors of a possible downgrade surfaced shortly after Italian Prime Minister Silvio Berlusconi announced in Rome that finance ministers of the Group of Seven industrialized nations may meet "in a few days" to discuss the sagging world economy.
The G7 members are Britain, Canada, France, Germany, Italy, Japan and the United States.
The announcement came on a day when financial anxiety gripped the globe. Stock markets worldwide saw intense volatility amid worries of a widening debt crisis in Europe and a stalled economic recovery in the United States.
American markets were dramatically up and down a day after having their worst day since the 2008 financial crisis.
Stock market values fell Friday across Europe and Asia, where reaction to news of the U.S. credit downgrade was mixed.
A scathing editorial in the Chinese state-run Xinhua News Agency criticized the United States for living outside its means.
"China, the largest creditor of the world's sole superpower, has every right now to demand the United States to address its structural debt problems and ensure the safety of China's dollar assets," the editorial said.
"To cure its addiction to debts, the United States has to re-establish the common sense principle that one should live within its means."
Other responses were more measured.
"We will have to analyze it. It will require some time," said India's finance minister, Pranab Mukherjee. "(The) situation is grave and there is no gain in making off-the-cuff remarks."
In South Korea, which also holds a large amount of U.S. debt, the Yonhap news agency said government officials were closely monitoring financial developments in the United States.
"The news is bad and Seoul plans to keep very close tabs on how the market reacts," Yoon Jong-won, head of the ministry's economic policy bureau, told Yonhap.
Concerns about debt issues in Europe appeared to battle with optimism that a positive U.S. jobs report indicated the American economy is not headed into a new recession -- the dreaded "double-dip."
"The crisis in Europe is quickly becoming on par with the financial crisis of 2008," David Levy, portfolio manager at Kenjol Capital Management, told CNN Money. "The jobs report shows that things aren't getting much worse in the U.S., but the focus is clearly on Europe at this point."
"We are going to get through this," Obama said prior to the downgrade at the Washington Navy Yard, where he announced a jobs program for veterans. "Things will get better. And we're going to get there together."

Obama, who spoke Friday afternoon with France's Sarkozy and German Chancellor Angela Merkel about the crisis, noted that July marked the 17th consecutive month of private-sector job growth in the United States, but said much more work needs to be done.

Battleground States Swing Against Obama

Karl - This morning’s Quinnipiac University poll is no birthday present for the president:

The national debt ceiling deal does not rescue President Barack Obama’s crashing job approval rating in Florida as he gets a negative 44 – 51 percent score among voters surveyed August 1 – 2, after the deal was announced, compared to a negative 44 – 50 percent score among voters surveyed July 27 – 31, before the deal ***.

This compares to a positive 51 – 43 percent approval rating for President Obama in a May 26 survey by the independent Quinnipiac (KWIN-uh-pe-ack) University poll.

Florida voters surveyed after the deal say 50 – 42 percent that Obama does not deserve to be reelected, compared to a 47 – 46 percent split before the deal and 50 – 44 percent support for his reelection May 26.

Indeed, the Q-Poll shows Mitt Romney and Rick Perry both gained on Obama in the post-deal polling.  Other internals are similarly bad.  NRO’s Jim Geraghty notes Florida women shifted from 53%/40% approval/disapproval of Obama in May to a 46/49 split today.  The Hotline’s Josh Kraushaar  thinks the most scary number for Obama in the poll is the 61% job disapproval among independents, with just 33% approving, noting:  “That’s Bush post-Katrina territory.”  Kraushaar also gives the broader context: “All told, we now have Obama behind/in deep trouble in FL, IA, PA, MI, OH, NH, and NC in the last month.”  He adds that those are “Dukakis ’88 numbers.”

Maybe Obama’s seventh pivot to jobs will turn things around.  Our Orator-in-Chief is taking a thinly-veiled, taxpayer-funded campaign tour through Midwestern swing states later this month.  As the odds of a double-dip recession rise, it may take more than words to slow the ocean of bad news for the unemployed and the Lightworker who desperately does not want to join their ranks next year.

American Debt Ceiling Deal from From Hell

Economic Collapse - Is the debt ceiling deal supposed to be some sort of a cruel joke?  Is this what the American people have been waiting months and months for?  The “debt ceiling deal from hell” is a complete and total fraud.  Barack Obama will not need to worry about the debt ceiling again until after the 2012 election, and no “real” spending cuts will happen until after the 2012 election.  The way the political game in Washington D.C. is played today, if you don’t get something right now, you probably will never end up getting it.  The Republicans have traded a massive debt ceiling increase right now for the possibility of very skimpy budget cuts in the future.  Meanwhile, this deal establishes a new “Super Congress” that threatens to fundamentally alter our political system (and not in a good way).  The funny thing is that everyone is running around proclaiming that the Tea Party won this battle.  That is a complete and total lie.
So what about the $917 billion in “immediate” spending cuts that the Republicans are getting as part of this deal?
Well, they aren’t really spending cuts at all.  Rather, they are spending caps.  Basically what is happening is that future spending increases are being cancelled and our politicians are selling that to us as “spending cuts”.
What is even sadder is that the $917 billion is spread over ten years and the vast majority of the “cuts” are in the latter years.
For example, even if you consider these to be “spending cuts” (which they are not), the deal calls for only about $25 billion in “cuts” in 2012 and only about$47 billion in “cuts” in 2013.
25 billion dollars is far less than one percent of the federal budget, so needless to say these “cuts” are not very impressive at all.
Okay, so how about the second stage of the deal which will produce “spending cuts” of between 1.2 and 1.5 trillion dollars?
Well, yes, these would actually be spending cuts and they would be spread over 10 years.
Near the end of the year, the new “Super Congress” (more on that in a minute) will submit a proposal to Congress which could cut spending over the next 10 years by a total of up to 1.5 trillion dollars.
If the recommendations of the “Super Congress” are not implemented, than “automatic” spending cuts of $1.2 trillion will go into effect over the next 10 years.

• However, there are some very important things to remember about these “spending cuts”.

First of all, none of these “automatic” spending cuts would even go into effect until 2013.  The face of American politics will be dramatically different by then, and there is absolutely nothing that makes these cuts binding on Congress.
As Gregg Easterbrook recently noted, Congress can cancel spending cuts at any time and for any reason….

By projecting the only tangible savings — which aren’t even specified, but are merely caps — into the future, the plan allows Congress to cancel them. In 2012 or any future year, Congress will say, “We can’t have caps this year because of the [INSERT ANY WORD CHOSEN AT RANDOM] crisis. We are postponing action till next year.” Rinse and repeat.

As I have written about so many times before, the U.S. national debt is completely and totally out of control.  This was supposed to be the moment when at least some members of Congress were finally going to get serious about our exploding debt.  Unfortunately, our politicians have sold us down the river once again.
Even if the best case scenario happens (which it never does) and Congress sticks to this deal for the full ten years (which is about as likely as hell freezing over), the “savings” that this deal would produce are quite pathetic as Peter Schiff recently explained….

The Congressional Budget Office currently projects that $9.5 trillion in new debt will have to be issued over the next 10 years. Even if all of the reductions proposed in the deal were to come to pass, which is highly unlikely, that would still leave $7.1 trillion in new debt accumulation by 2021. Our problems have not been solved by a long shot.

Keep in mind that Congress can change this deal whenever it wants.
So nobody should get excited about these “spending cuts”.  After all, when was the last time that “future spending cuts” actually materialized in Washington?
The reality is that neither political party seems to want to do much to cut government spending.
So the band will play on and the can will get kicked even farther down the road.
When Obama was inaugurated, the U.S. national debt was $10,626,877,048,913.08.
Today, it is $14,342,358,440,969.10.
But what this “debt ceiling deal” will do is it will give the congressional leadership of both parties much more power.
The new “Super Congress” that this deal establishes will be granted “extraordinary new powers” that regular members of Congress do not possess.
For example, The Huffington Post says that any new legislation produced by the “Super Congress” will not be able to be filibustered or amended….

Under the reported framework, legislation the new congressional committee writes would be fast-tracked through Congress and could not be filibustered or amended.

So who will be a part of the “Super Congress”?
The members will be chosen by the leadership of both parties.
So anyone that is not part of the “establishment” is not likely to be included.
The following is what U.S. Representative Ron Paul had to say about this new “Super Congress”….

“Nothing more than a way to disenfranchise the majority of Congress by denying them the chance for meaningful participation in the crucial areas of entitlement and tax reform. It cedes power to draft legislation to a special commission, hand-picked by the House and Senate leadership.”

It is this new “Super Congress” that will decide what will be in the package of “spending cuts” that will be voted on by the end of the year.
Regular members of Congress will be frozen out of the process.
On December 23rd, Congress will be required to vote up or down on the spending cuts proposed by the “Super Congress”.  Regular members of Congress will not be allowed to amend the legislation in any way, and no filibusters will be permitted.
Does that sound very “American” to you?
The more that one examines this “debt ceiling deal”, the worse it looks.
Meanwhile, many Democrats are running around and acting as if their lunch money was just stolen.
For example, the following is what Politico is reporting that U.S. Representative Mike Doyle said about this deal….

“We have negotiated with terrorists,” an angry Doyle said, according to sources in the room. “This small group of terrorists have made it impossible to spend any money.”

Democratic congressman Emanuel Cleaver was even more dramatic when he proclaimed that this deal “looks like a Satan sandwich“.
Well, this deal is a total nightmare, but not for the reasons that Cleaver is suggesting.
This deal opens the door for more rampant deficit spending, and nearly all of the “spending cuts” are put off until after the 2012 election.
Basically, the Republicans got taken out behind the woodshed and beaten to a pulp on this one.  Any Republican that is trying to proclaim that the debt ceiling deal is a “great victory” is a complete moron.
But in the end, it really does not matter which political party gets a “victory” out of all this.  What matters is that our federal government is still steamrolling toward a date with financial oblivion.
If this is the best that our politicians can come up with, we are absolutely doomed.

Progressive Dems: Smearing The Tea Party

Jeff Jocoby - DID VICE PRESIDENT JOE BIDEN slander Tea Party Republicans by saying they "acted like terrorists" in the protracted debate over raising the federal debt ceiling? To use such language would be contemptible, especially in the wake of Anders Breivik's twin massacres in Norway and just weeks before the 10th anniversary of the 9/11 atrocities. Biden claims he never said it, and out of respect for his office I'd like to say I believe him.
But I don't.
Politico reported Monday afternoon that at a closed-door meeting of the House Democratic caucus the vice president joined in the "hot rhetoric" against GOP conservatives, specifically agreeing with one Democrat who described them as a "group of terrorists [who] have made it impossible to spend any money." Biden's office initially refused to confirm or deny the comment, but after it became public, he went on TV to disavow it: "I did not use the 'terrorism' word," he told CBS.
What makes Biden's denial so implausible is that liberals and Democrats have been flinging the "terrorist" slur across the aisle for weeks. Do you remember President Obama's call, after the deadly shooting in Tucson last January, for "more civility in our public discourse?" Remember how he deplored the urge "to lay the blame for all that ails the world at the feet of those who happen to think differently than we do?" Many on the left have apparently forgotten, to judge by their zeal for linking the Tea Party's views on the debt ceiling to the extremism that leads fanatics to kill.
Listen, for example, to former Obama administration official Steven Rattner, speaking on MSNBC last week: "These Tea Party guys are, like, strapped with dynamite, standing in the middle of Times Square at rush hour and saying, 'Either you do it my way, or we're going to blow you up, ourselves up, and the whole country up with us.'"
Or to New York Times columnist Thomas Friedman, warning that "if sane Republicans do not stand up to this Hezbollah faction in their midst, the Tea Party will take the GOP on a suicide mission."
Or to Representative Steny Hoyer of Maryland, the House Minority Whip, talking about "Russian roulette" with loaded chambers, and how House Republicans "want to shoot every bullet they have at the president."
Or to former Ted Kennedy aide William Yeomans, now an American University law professor, who says labeling Tea Party Republicans "hostage-takers" doesn't go far enough, since "they have now become full-blown terrorists."
I am no prig when it comes to robust political commentary. I have always believed that the marketplace of ideas has room for rhetoric that is passionate, combative, or angry. And I respect the power of an apt metaphor to enliven a critique or sharpen an argument. But there is language that goes beyond the limits of decency. Smearing people as "terrorists" -- as the equivalent of hate-filled zealots who blow up embassies and gun down children and detonate bombs in crowded subways -- adds nothing but poison to a debate over fiscal policy. There is nothing clever or illuminating about such invective. It is illiberal and grotesque and it pollutes our public discourse.
Twenty years ago, Mike Godwin of the Electronic Frontier Foundation observed that in any online debate, it is only a matter of time before someone invokes Adolf Hitler or the Nazis to discredit an opponent's position. Sadly, "Godwin's Law" seems more entrenched than ever, and it isn't limited to the internet or to Nazi analogies.
In the course of the debt-ceiling showdown, White House Press Secretary Jay Carney told reporters that GOP resistance would force the government into "a Sophie's choice. Who do you save?" -- a Godwinian reference to the movie in which Meryl Streep plays a mother able to rescue only one of her children from death in a Nazi concentration camp. Republicans and Tea Party members also found themselves compared to pro-apartheid Afrikaaners, to the Ku Klux Klan, to arsonists. And, over and over again, to terrorists.
I know that American politics, to coin a phrase, ain't beanbag. Political passions have always run high, and I wouldn't want to live in a country where public issues and values weren't vigorously contested. But there is a difference -- a sharp difference -- between disputing a view you reject and demonizing someone who holds that view as a murderous enemy. Liberals who loathe the Tea Party have every right to challenge it. But when, in an apoplectic frenzy, they defame its members as "terrorists," they go way too far, and debase only themselves.

Progressive Dems, Bringing The Hate

JustOneMinute - Waking up to some joe - Times columnist Joe Nocera would never use the word "jihad" to describe actual Islamic terrorists, but he happily applies it to the Tea Party.  And Joe Biden described the Tea Party Republicans as "terrorists", now that dissent is the lowest form of non-patriotism.

Oddly, both Glenn Greenwald and yours truly had predicted this reaction to the collapse of Team Obama and his abandonment of any agenda other than his own re-election and eventual book deal.  Over to Greenwald:

On a different note, I am quite certain that VastLeft has captured, in cartoon form, exactly what the rhetorical strategy will be for dealing with liberal anger over this deal (click on image to enlarge):

And only a few weeks back I wrote this:

IT'S NOT JUST SCHADENFREUDE:  OK, its fun watching progs gnash their teeth over the antics of The One.  But their unhappiness with Obama is also relevant for 2012.

In 2008 conservatives couldn't get excited about supporting McCain, so they got excited about opposing Obama.  A similar dynamic will play out on the left in 2012 as they engage in a hate-fest against whomever the Reps nominate.  The Bush-bashing and Palin-smashing will seem calm, objective ad dispassionate by comparison, and this will be true even if Republicans nominate Lincoln and Eisenhower.

If you can't get positive about your guy, get negative about the other guy. The Dems are out of ideas and out of people to love, so they need people to hate.

Go Ahead, Democracts, Do It, Primary Obama

Phineas - It’s no secret that a lot of people are unhappy with the debt deal taking shape in Washington. For conservatives and other adults, there’s disappointment that there’s no requirement to pass a balanced budget amendment, no entitlement reform, and not nearly enough spending cuts. On top of that, it authorizes further extensive borrowing, and there’s a danger of a tax trap. (For reasons to be satisfied, even if not happy, see Pethokoukis and Bradley. And you can put me in this camp, too.)

But large segments of the Left are unhappy, too, because spending gets cut (even if it’s just a slowing in the rate of growth of spending) and they don’t get their binky tax increases. The Congressional Progressive Caucus and the Congressional Black Caucus are just livid with Obama’s bowing to those “Tea Party extremists” and are planning a press conference today to demand he violate the Constitution by pretending the 14th amendment allows him to unilaterally raise the debt ceiling. And if he doesn’t…?

Are you ready for Bernie 2012?

But Independent Vermont Sen. Bernie Sanders is not [satisfied]. In an interview with liberal talker Thom Hartmann on Friday, Sanders spoke out very aggressively about the possibility of Obama facing a challenge from his left for the Democratic nomination.

“Well, at this point I have not,” Sanders said. “But I am now giving thought to doing it. You know, I think you know the names out there as well as I do. And I think the American people have got to be engaged. It’s not just me or anybody else here in Washington. There are a lot of smart honest progressive people who I think can be good presidents.”

Sanders said such a challenge was necessary since in his estimation, the president had begun to take his position as the party leader for granted.

I can genuinely sympathize, since we know the White House is thinking “Where are they going to go?” No one likes to be taken for granted. (1) But a Sanders candidacy? Sanders may be the only open Socialist in the Senate (the House, on the other hand…), but I’m willing to bet that, when asked who Bernie Sanders is, eight out of ten Americans would ask “who?” and the ninth would think he’s a colonel who sells chicken. While improbable insurgent candidacies have happened before –Gene McCarthy’s surprising strength lead LBJ to withdraw– it’s hard to imagine our Montpelier Marxist developing the Big Mo.

And yet the discontent with Obama on the Left is real, so, who else might? Your guess is as good as mine. Jesse Jackson is yesterday’s news; besides, he’d probably like to do something else to Obama. Former Wisconsin Senator Russ Feingold might do it (or not); while he lost his bid for reelection, his progressive/social democrat credentials are near-golden and he’s usually a good campaigner. While he wouldn’t win the nomination (2), a la Kennedy in 1980 he could mount a strong challenge. That would force the President to move left to defend his base, setting up a greater contrast with the eventual Republican nominee and probably costing him more of those independents he is already in trouble with.

Darn. That would be awful, wouldn’t it? (3)

So, come on Bernie, Russ, or whoever. Do it. Do it for True Progressivism. Do it for your party. Do it for your country. Do it… for the children.

Primary The One.

Footnotes:
(1) Like, say, the way the Democrats take African Americans wholly for granted. Someday they’re going to wise up to this.
(2) No way the Party would ever let Obama be thrown under the bus. They’d lose most of the Black vote in a flash, and without bloc-voting by African Americans, the Democrats never win another national election.
(3) Yeah, I know the Obama machine would eventually put down an insurgency, but it sure would be fun to watch them have to waste time and money.