S.&P. Downgrade Is Seen as Adding Urgency to Debt-Cutting Panel

Credit rating is almost sure to increase pressure on a new Congressional panel to recommend a package of deficit-reduction measures.

Comments: 125

  1. It's all politics by the S&P. They are crooks themselves having sanctified the AAA rating of mortgage backed securities in 2008. Who needs them. Ignore them and go on.

  2. Aside the the ideological differences being aired (Republican cut entitlements to make tax cuts possible; Democrats increase taxes to sustain entitlements), where is the expertise that might guide us into the future. Are there serious economists who are making cases for one direction over the other? There needs to be some serious nonideological solutions to the problem of the economy.

  3. You think?! China, our primary lender is scolding the US for "debt addiction". The ratings agencies are trying to tell us to get our spending under control.

    Congressional action to raise the debt limit only allows us to borrow more. It did very little to solve the problem, which is that we spend nearly twice our income.

    We need to stop pointing fingers and blaming each other, and solve the problem. First, we must recognize how big it is.

    Liberals, we cannot fix it by just raising taxes on the rich. They already pay nearly all the income tax, and if you double their rates, the economy will certainly crash.

    Conservatives, we cannot fix it by cutting spending on wasteful programs. Sure, there is a lot of waste, but again if we cut government spending in half, the economy will certainly crash.

    So, lets put together a reasonable plan that incorporates some increased taxes, spending cuts aross the board, and reform of Social Security and Medicare.

  4. The stimulus bailed out the banks and did nothing for job creation. Why wouldn't we go into a second recession? We've been betrayed by the U.S. government. I like Obama but at least if he was going to lose everything he could have at least stood up for the working/middle class and done what was right. I've lost a great deal of respect for him. He never stood his ground.

    When things get desperate here, will the riots start? Something has to correct the fact that everything is for the benefit of corporations(how could they be counted as individuals?). Things that every person knows, how unjust our society as become, these things are so clear that it is bewildering that the people don't do anything. The Republicans are greedy and evil. Wealth doesn't trickle down, not so much as a drip.

  5. How can we take S&P seriously when they are a major causal factor in our current situation. Their abject failure to correctly rate toxic financial instruments allowed the "Great Recession" to happen. Why aren't they in jail and at the very least a defendent in civil legal proceedings? They and their ilk should be financially wiped out.

  6. The Administration and Congress could have used this downgrade as a wakeup call and began a concerted effort to really work together—for the nation’s sake for once. Is that too much to ask for? Instead they became defensive and attacked the S&P—which is not surprising since attacking each other is what they seem to do best. Now they have a common enemy the S&P not their ineffectiveness and that will further distract them from the true task at hand—working to fix the economy. They could have said, “We deserve this rating and will work hard to regain the trust of the American people and restore our AAA rating but they didn’t—they found fault with some numbers and questioned the S&P’s qualifications and motives. Frankly, the S&P was correct in their qualitative assessments. Until voting Americans recognize that those in the administration and congress are simply not qualified to deal with our most critical issues, that their motives are not in the best interest of all Americans or even likable as people, we are mired in problems that cannot be alleviated let alone solved by them. This congress and administration will be remembered for a lot of “firsts” and none of them enviable. Downgrade all of them to the unemployment lines.

  7. The absolute key to reviving the US economy, is plainly and clearly decentralization. M&A and ever larger businesses displacing competition has been the root cause of our economic failure. These things are economically regressive and dear causes of the Republicans and NeoCons who frankly don't anything except to obey their master (read benefactor's) words. Until we have a government with a complete minority of these political carpetbaggers, and until we make ALL corporations pull their own weight (no tax shelters), we will continue to see a concentration of wealth, and the irresponsibility and devaluation of the currency, and shrinking of the economy.

    You want to shrink Government, then sit down and take a case by case analysis of what can be agreed on for what government should spend money on. Categorically. Not this confusing numbers game intended to turn off the American Public.
    Mr. Obama, start expecting the best from Republicans and NeoCons and hold them accountable when they don't deliver. They are playing you for a fool now, having you expect the worst, and then make deals that they won't do the worst. Smarten up. Toughen Up. We need a LEADER! Not an Appeaser. Yo won't talk a wolf out of eating your sheep.

  8. It is urgent that the Congressional panel recognize that deficits can be reduced by fair taxation on those who have been benefiting from the economic climate within the USA during the time that the debt has been accumulated. It is urgent that the Congressional panel recognize the cost of empire. It is urgent that the Congressional panel put aside the ideology of Grover Norquist.

  9. Monday, August 08, 2011

    Imagine....a birthday we all can remember; not so much for any gifts given, but rather taken away by the inept decisions made by Obama and his hand picked administrations effort to spend our Nation into bankruptcy, in their search for the vote.

    Imagine...a scenario or comedic scene where columnist use riddles fused with questionable optimism throughout their thoughtfully biased columns of the day, when referencing any news that might befall the American people, as a result of the latest gift from Obama. Whose leadership skills have delivered monumental losses to our country, to include the loss of our Nations triple, (AAA) financial rating, which has been down graded to a double, (AA) by S&P.

    Talk about birthday parties and deceptive narrative, I don’t know about you, but I am not sure our country can take much more politico chicanery and illusory rhetoric.

    Imagine...the news media reports; the so called debt limit crises has been temporally resolved; resulting in the latest downgrading of the nations credit rating by S&P effectively reducing America to a questionable nation financially. While we all sit around patiently waiting for the latest appointments to be announced regarding a so called super-committee who will supposedly address the short comings in the latest law pertaining to our debt limit, they and their political collogues just past.

    Imagine...members of the same membership who have yet to be appointed by their political colleagues, clamoring for a new board - committee position, established to review new options! Its almost comical when you think about it for a moment or two, I mean its sort of like a fraternal brotherhood of wunderkinds whose only experiences in life is running for this or that political office with an eye toward their own tenure while sitting on this or that self-serving oversight committee..

    And all while optimizing any and all political opportunities that may arise, or come their way,

  10. Obama and Kerry would have probably shot Paul Revere. We are in deep trouble, but they want to mute the alarm. If S&P is wrong, it will lose some credibility. I don't blame my 'door ajar' car alarm, I blame myself for not closing a door. Obama and Kerry must learn that more and more of us are becoming wise to them, and holding them responsible for this mess.

  11. Although I am progressive and will vote for him in 2012, Obama will lose the credit rating battle with the Republicans and the tea party radicals.

    Tha radical position is that Obama caused the credit rating to fall becuase he could not control spending. Unemployment is still over 9% because Obama has been president for 2-1/2 years and the Democrats control 2/3 of the government and they have been unable to control spending or put together a credit worthy budget. Obama is at fault for the current mess we are in and why there are no jobs.

    This is a simple message that an honest, complicated, professorial reply cannot counter. The radicals cannot be reasoned with nor compromised with and it is impossible to underestimate the comprehension of the average American.

    Obama has not been able to come up with a concise, persuasive reply to this simple, but untrue, message of the Republicans. We need more fire, intensity, and conviction from him. I am deeply disappointed in Obama and the Democrats, but I have no where else to go.

  12. Hypocrisy; As long as its other countries, that are being down graded americans don't have any problems with the rating agencies.
    If any other nation would have done the same political deadlock stunt that the US have done in the past few months their ratings would have gone rock bottom - and would be bankrupted. The US is just getting a bit of the medicine that Europe has been enjoying for the past 2 years.

  13. Immediately change the tax code n the following manner.

    A- Progressive flat tax:

    1- Incomes under $ 75,000 - pay 12%
    2- Incomes from $ 75,000 to $ 250,000 - pay 19%
    3- Incomes above $ 250,000 - pay 24%

    No deductions.

    B- Change the tax on corporations from a tax on net income to a 6 % tax on Gross Revenue:

    So a company like Exxon Mobil with $ 440 billion in revenue would pay over $ 25 billion in taxes. Currently they pay $16 billion. Ge with over $ 200 billion in revenue would pay $ 12 billion. Last year with all of their deductions they owed no income tax. Overnight the treasury would have a surplus. Raise the new Gross revenue tax until the budget is balanced. Keep it simple, no deductions, and all will work out.

    C- Place a one time tax on all foundations, estates, and non profits at 15% of their current wealth for they were formed to escape taxation. Harvard University with $ 45 billion in investments would have to pay $ 7 billion. Bill gates foundation would have to pay a tax. No longer would the wealthy be able to escape proper taxation by simply creating a foundation, or trust.

  14. S&P was generous to the US. The scary thing was Geitner's outrage. He sounded so believing of himself, when, in fact, he was essentially making a statement in defense of an indefensible situation. S&P is saying, like most of us did all last week, "show us the money". Now we wait for an adversarial gang of twelve to come together with something real. Show me.

  15. Wall Street paid S&P to give them AAA ratings on their toxic debt. Who paid S&P to give the U.S. a debt downgrade?

  16. The Congress needs to act responsibly by raising revenue and cutting expenditures. The rich need to pay their fair share and corporations need to have their subsidies phased out now.

  17. They'd better investigate the connections of top S&P officers with those who are betting against the stock growth on Wall Street. Because it's exactly the time when somebody is doing another hundreds of billions of dollars on this sell, taking them out of the economy.

  18. To be sure, S&P lost significant credibility during the financial crisis. However, to criticize S&P for their view that the US is in a dangerous financial situation is akin to blaming the thermometer because this summer has been so hot.

  19. The US cannot cut spending to work out of the fiscal hole we are in. We mush raise revenue. The Bush tax cuts of 2001 and 2003 have starved this country of neded revenue. They must be allowed to end. If we want any programs at all -- think helping people after floods or hurricanes or tornados -- all levels of government need revenue. And if you don't think so, you are delusional.

  20. This is the time for leadership to emerge to start discussing what the United States will be like as a country in the next few decades. What we are doing now is not sustainable under any set of economic predictions, regardless of the recession. If we were growing at 2-2.5% (which is more then we can hope for because we are a mature western republic with high labor costs and out of control medical costs) our federal benefit schemes would not be sustainable under ANY of the increases in taxes that either party has suggested.

    Progressives and liberals have to acknowledge that the 20th century was an anaomaly that created a welfare system that will fail of it's own weight and could never have been sustained because of changes in life expectancy, demographics and market competition from emerging nations.

    Conservatives and Republicans have to tell us what type of system we should have for the people who are the neediest in our nation, and what economic justice means in a US where large numbers of our citizens just do not have the basic tools to manage their lives.

    However, citizens have to stop choosing the depency, economic suicide model of single parenthood and generations of people on the dole.

    The elderly and the incompetent are also going to be faced with the certianty (whether we like it or not) that if they do not possess unlimited person assets, they cannot demand that any society support their "rights" to the extent that the financial aoutlays become a suicide pact for the future of the country. We have to set limits and ration resources, and our focus should always favor the future and the young.

    It is the able bodies and the intellectually gifted that will create the wealth we need to establish exceptable norms for welfare. The demands of the needy must be supported by those who create wealth. If there is no wealth being created then the needy can riot, and vote and do whatever it is they will do, but there needs will still go unmet.

  21. Except for Barney Frank, no one in the Republican party mentions ending the wars immediately. The Defense Department is a big drain on the nation's treasury and a splendid place for all the contractors to loot and commit fraud.

    We have never learned anything from the Vietnam war. Now, China is dictating terms to the United States.

    Get out of the world trade agreement. Impose heavy tariffs on all imports from China. This will bring back manufacturing jobs back to the USA.

    Yes, I know. I have been there.

  22. Although theres no doubt that the U.S has to get it's budget in order,the downgrade by S&P was motivated by their desire to gain respect in European markets. Just listen to the earnings call by McGraw-Hill, who owns S&P. This company just made a giant mistake.

  23. It is utterly irresponsible to write this story without noting that interest rates on US instruments are at historic lows--that the five year yield on treasuries is 1.25%.

    There is no way the S&P analysis makes any sense--the market continues to consider the US the safest place to keep funds. In fact, yields for all US instruments are substantially less than AAA munis or corporate bonds. http://finance.yahoo.com/bonds/composite_bond_rates

    It is absolutely irresponsible, not to mention "unbalanced" not to note that the marketplace rates are at variance with the S&P rating.

  24. @Rasmussen: Barney Frank is a Dem BTW.

    I have absolutely no repsect for S&P. They are in large part responsible for the crisis that we currently find ourselves in and their ability to assess risk ratings is poor. Having said that - their action may bring some sanity to our political process. Let's hope.

  25. Urgency: to be urgent. the quality or state of being urgent, insistence. 2. a force or impulse that impels or constrains, to urge.

    If Barack Obama has an ounce of Urgency in his body, none of this would be happening. The man just does not take initiative and get ahead of issues.

    Face it, Democrats. You gave us a teleprompter reading laid-back college Professor in the biggest leadership role in the world.

    Obama is not a leader and never will be. That's why the Tea Party Republicans continue to roll him.

    Expect matters to only get worse, until there is an actual leader in the White House.

  26. The news gets more sickening by the day. More 'savings' off the backs of the 98% rest of us. More wealth to the already obscenely rich, Corporations, Banksters and Wall Street.

    Lets all tell Obama not to bother to run for a second term. Not to waste his time, or money. Better to try to redeem himself by doing what we elected him to do. Come down off his pedestal - and LEAD. Tell the Repugs to shove it. Use the 14th on any future debt ceiling extortion. Ignore the bill he just signed - no more cuts. Raise taxes on the rich, end subsidies, and corporate loopholes.

    End both wars immediately - they are now rightly called the Obama Wars. He now owns them. End them, NOW!

    Act like you control two of the three branches of Government. No more cave-ins and wimpering afterward.

    Otherwise, resign. Give someone else the opportunity to finally lead.

  27. Anyone who thinks this super debt cutting panel wil actually cut anything is delusional. As usual in Washington, there will be a lot of deliberation, discussion and pontificating by self-serving politicians. Dire warnings will emanate from the panel. They will recommend cuts, but none will be made, since Democrats will mobilize every special interest group under the sun in protest. The federal debt will continue to grow by leaps and bounds, and the world will contine to turn. As usual.

  28. I think this will further complicate the problems. Republicans are not going to nominate any compromising representative for the Revenues and no solutions will be found. This will result in accross the border cuts without any revenues. The country will sink further and further....

  29. This should be a giant wake up call for Americans to really understand how serious our problems are. We cannot "tax" the rich to get out of this hole. We need to cut waste, fraud, cut Medicare and Medicaid (there is simply no way to reduce our debt without touching these), and I for one think we need to start reporting those who we all know are on "disability" but who do in fact earn a living and do it frauduently. If we don't get our house in order soon, it is going to be VERY ugly indeed.

  30. It is now up to congressional leaders to appoint persons to the budget panel who understand the importance of compromise to a representative democracy.

  31. Does anybody else see a pattern here? S&P, that sanctioned all the phoney credit derivatives, is now essentially telling us how to run our country. Don't S&P and the rest of the ratings agencies get money from the banks? So the banks want the entitlement programs cut (remember Social Security is not a handout by the government but the people's retirement fund paid for from our paychecks but borrowed from by our government with I.O.U.s that are not being paid back). So S&P is not pushing for more revenues(interesting) but more cuts that will hurt the middle, working and poor classes (how long before we don't distinguish between these three classes?)At a recent doctor's visit, I noticed a sign near their desks of receptionists, saying they can no longer get Medicaid papers processed and hence, can no longer accept Medicaid patients. This is basically a nice doctor so I don't think he is being a creep to be a creep but when I asked them out of curiosity and concern why they couldn't process Medicaid papers, I got a convoluted answer that made no sense. Is Medicaid basically not functioning anymore already? Basically, when I saw this headline this morning, I understood why S&P had done what they had done with the credit downgrade - I really believe there is an agenda we have not been privy to, to cut many of the programs that serve ALL the people of this country, that furthers an agenda of a very wealthy, RULING class and the masses of the poor they intend to rule.

  32. Cuts alone are not going to do it. The Tea Party will again lead us to the abyss if it is able to force a cuts-only approach. They don't get the connection between government spending and jobs. Defense contracts, health care dollars, and virtually all other government expenditures employ Americans. Cut those dollars and you cut those jobs. Already, government is worsening the employment picture as state and local governments lay people off. Solving this problem has to include higher taxes on the super rich and corporations that don't need the help. For instance, instead of giving tax breaks to oil companies, let's give them to alternative energy entrepreneurs who can form the foundation of our economic future.

  33. If they go for cuts right now, they're just going to throw the economy back into recession, and tax revenues won't increase. What they need instead is stimulus spending to end the recession along with tax hikes for the wealthy to keep the deficit from looking too scary. Then a long-term plan with special emphasis on medical costs, the big ticket item here. The Europeans spend half of what we do per capita on medical care, no reason we can't do the same.

  34. My oh my, here are the leftist democrats speaking out of another side of their mouth with concern for the deficit all of a sudden when it becomes so patently obvious where their out-of-control spending has brought us. clearly we have to cooperate to dig ourselves out of this hole, and step one is to kill obamacare and start over with a "balanced" approach.

  35. The death of Gov. Mark Hatfield brings into focus the problems of todays Congress. Hatfield was one of the rapidly diminishing number of distinguished Republicans of the past era. A Republican by philosophy but an individual by character and intellect. He valued his party but served his country. His kind are gone, leaving only the new Republican, clones who march in goose-step synchronization, finding power in herd conformity but accomplishing only destructive coups. They serve not for country but only to defeat Barack Obama.

  36. So the Republicans have won. By next year, they will have succeeded in plunging the economy into a second recession, causing who knows how much pain around the country, and they have done it to win the White House back. And it really does appear as though this will happen. I cannot imagine Obama could get re-elected in the middle of a second recession.

    So...who has pictures of Mitt the Mormon with a scantily clad female? Anyone?

    That might be the only thing that will save Obama at this point.

  37. Let's hope that the Panel can look at both sides of the issue: Balancing the Budget, which should be a long-term goal, and Growing the GDP, which should be immediate. The Republicans still claim that Stimulus doesn't work; but, of course it won't work if you don't make it large enough and give it the political support that it needs to work.

    The Deebt-to-GDP is a ratio. Focusing on growing the GDP will have much better social counsequences, as well as provide the support that the Worldwide Economy needs, as well. More people working increases the consumer spending that we need and, thus, increases tax payments.

    Just look at Europe. They started tightening too soon and began contracting mazny economies--thus increasing the Debt-to-GDP. Are we going to follow their lead--off the cliff?

    Yes, the Republicans have a Plan; but its not the Jobs (Jobs, Jobs), which they claimed in 2010, its to take over all phases of the Government. For years, they have wanted to eliminate Social Security, Medicare, Public Education and just about anything that adds to our quality of life.

    That's a strategic plan to expand the Social Divide. Then, they can overturn any regulation of the financial markets, the environment, firearms, etc.

  38. And still no tax increases on the wealthy. When will they realize that there isn't enough gold in the world to cover their suddenly-shrinking mountains of money? Bringing others to wealth is the best way to insure one's own.

  39. The GOP just inherited direct ownership of the economic malaise that results from this downgrade. Without their recent actions surrounding the debt ceiling, this downgrade would not have occured. Period. I give props to S&P for adding consequence to the GOP's reckless actions. Hopefully this will prompt them to take the next round of discussions more seriously.

  40. That's good news! The more urgency towards deficit reduction the better for our nation's short and long-term fiscal health.

    Seems to me that this bipartisan deficit-reduction panel meeting could be incredibly short. They need only vote to approve the Gang of Six proposal, and flesh out the details of it a bit more. That bi-partisan plan, already developed, is balanced, fair and equitable. And most importantly it digs in to our deficits in a substantive way.

  41. The "supercommittee's" recommendations better include some revenue enhancement. As a Social Security recipient (BTW, I continue to work and contribute)I am not about to lay down for benefit cuts (like changing the formula for COL increases) when General Electric pays no corporate taxes and CEOs who make more in a hour than I make in a couple of months can deduct their corporate jets.

  42. Firstly, a few of the comments here need to be reminded of the facts. As laid out in a pretty exhaustive Washington Post article, the deficit began to explode under George Bush as a result of his policies, starting with a wholly uneccessary tax cut. Instead of using the surplus he inherited from Clinton he wanted to give the people back their money. He and everyone else seemed to forget it was also the people's debt. His two rounds of tax cuts, his unfunded wars, his prescription entitlment program, all turned a projected $2 trillion surplus that would have eliminate the national debt, into the gapping whole we now have. Obama's policies -- put in place mostly to deal with the economic train wreck he inhereited -- acount for less than half the debt Bush incurred. I'm not sure where the Tea Party was then, or the fically conservative GOP, for that matter. I suppose party loyalty and buying votes was more important than standing up to erroneous Bush policies.

    So, let's start from the facts. This isn't result of Obama and his administration. This is the Tea Party Downgrade, pure and simple.

    As for how we fix this mess, I think that needs to focus not only on national tax rates and the like. It high time we also brought into this debate some facts the Economist recently pointed out. Namely that there are some states that get back less than the dollar they put into the federal coffers, and there are some that get more than their fair share. And it turns out that most of the states that get less are the blue states, where the Tea Party has little voice. Conversely, most of the states getting more than the dollar they pay in are red states -- the very ones where the Tea Party is strongest, and the very ones with the most strident anti-revenue Congressmen. Fine. If you in the Red States want a smaller government, I think the Blue States should be happy to comply. Every state should only get a dollar back for each one it puts in the federal coffers.

  43. It's truly remarkable, that the Republicans response to this fiasco is to call for immediate, deep cuts in spending, while claiming that any increases in revenue are "job killer". If one is bad, they are both bad, and cutting spending right now is just plain dumb. It's immediate effect would be to put tens of thousands more people out of work slowing the economy even further. If this is what passes for economic thought then we are in serious trouble indeed.

  44. The American creditworthiness will be downgraded further
    to the appropriate level which the economy performance
    justifies. America will go through re-pricing period which
    will have disastrous impact on GDP and overall living
    standards. Please remember that by some we are called
    a “parasitic” country. Some know that the world was
    robbed by the Wall Street – wait how derivatives
    debacle will unfold ($600+ Trillion)…

    It is sad how this beautiful country is going down the drain.
    Unfortunately, it must go deeper and it will go without any
    doubt because the political class is self-destructing, manically
    demagogical, socially selfish, poorly educated, unfocused.

    It is not about downgrading only.

    Country which does not manufacture much
    ( and exports basically armaments and corn), with ever
    smaller industries, and is only good in printing dollar,
    but dollar is just a piece of paper, the world will start treating
    it as such soon. Then, the real downgrade will start.

    Pretending that things will return to normal by itself
    is an intellectual fraud. Without planning for our future,
    in a pragmatic way, not much but second dip recession
    will happen. Then, sans-culottes will pronounce own

    The S&P downgrade, even if symbolic, may have some
    positive effect. It may bring again American self-reliance
    to fore, living beyond means cannot last forever.
    The world is too poor to have us on welfare much longer.

    Rolland Norman

  45. Here is an idea that will help take some of the politics out of the panel. When we were children and my brother and I would fight over who had the biggest slice of the pie - my mother would have one of us make the first cut and the other one choose the first piece. In the same way - lets make the Republicans choose the Democratic panel members and the Democrats choose the Republican members.

  46. I understand that the CEO of S&P is a Republican supporter of Mitt Romney---coincidence? Is he looking to make the Obama administration take the fall (along with the rest of us) for what Bush and Cheney dug us into, abetted by now by the bullying and blackmail of the Tea Party congressional crowd?

    And do remember that S&P contributed mightily to the country's financial crisis by providing AAA ratings to sub-prime mortgage securities -- they were so willing to do the bidding of the banks and have the wool pulled over their eyes then, why should anyone pay attention to them now?

    The likelihood that this will empower the right wingers on the super committee makes me gag. Let's at least pressure Obama and Congress not to appoint Blue Dog Democrats to that over-empowered group.

  47. From President Obama's inauguration, the Republicans have explicitly stated that their main goal is to make sure he "fails". They have blocked every effort of his - from improving the economy to appointing people to fill key posts in his administration.

    The GOP didn't care if they brought down the American, and global, economy in their efforts to prevent Obama from solving many of the problems that the Bush administration left behind. They knew that if the economy turned around on Obama's watch, he had a better chance of getting reelected.

    Now it's up to the media to expose the real reason the economy has not rebounded - GOP obstructionism - or else the U.S. will continue its slide to third world status.

  48. Government spending must be reduced. There are plenty of reports that describe waste,fraud and multiple government workers doing duplicate work or not doing any meaningful work at all. Fraud in food stamps, waste in paying for incorrectly prescribed motorized scooters (over $700 million), etc. The press is full of such examples. The current administration seems incapable of acting on the information. Sure, increased revenues can be obtained from tax reform and putting people back to work, but they are too busy blaming anyone who criticizes them to act on these measures. Also - any additional income should only be applied to debt reduction and not to fueling more government programs. S&P is correct!

  49. When underfunded entitlements come to over $100 trillion, dickering about whether a delta of $2 trillion or so in deficit reduction will make everyone think we're responsible adults is absurd. Furthermore, by concentrating solely on the deficit, we are taking our eye off what should be our main goal, that of reinvigorating the economy and restoring the employment and economic prospects of our poorer citizens.

    The deficit is not a standalone problem, but is closely intertwined with the overall economy and matters of health and elder care. Were we to resolve our prosperity problems, the rest would become more tractable to resolution. Without it, we are merely stuck with endless austerity.

  50. Hopefully everybody, including President Obama, that a responsible leader cannot economically rest on a slogan of "Yes, We Can!". An economically responsible leader first reaction should be "No, We Can't!" Of course elections are not won on saying No, but saying Yes. The problem is that over the past 20 years or so, whether in Washington or Athens or Dublin or London politicians of various political stripes almost never say NO and use debt (Europe and USA), book keeping gimmicks (like PFI in the UK)or other devises to hide the public from the truth and the harsh reality of choices made. Everybody wanted bread and circuses and polictians were only too happy to comply. The bill for that reckless behaviour has now arrived. Of course their is an absoulte requirement for governments and people to tighten their belts and get the house in order. That means spending cuts and taxes. Without a roadmap which incorporates the "vision thing" the Committee will get bogged down and go nowhere. They may be able to put a bandaid on the crisis, but that will only plant the seed to the next crisis. That means a bigger and more wide ranging decision on what is the limit of government overall and within the agreed writ of government, debate the prioirites. The opportunity is now for Obama, the person best placed, to lead that debate, especially in the run up to the election. He gets in right, he will have set an agenda for a generation. Gets it wrong he becomes part of history. Republicans, Democrats and even Tea Party people should urge the President to lead that debate and constructively take part. Leading the debate does not mean the result is set in advance. I does mean that in Nov 2012 the American voter can make a decision based on full airing of the issue, decide their own priorities and know the consequences of whatever action results.

  51. Like many other liberal Democrats, I think that since the Republicans have been so obstinate and ruthless, the time has come to give as good as we get.

    Reid and Pelosi should appoint to the “super-committee” only hardliners who have signed a Norquist-style pledge to refuse to support any plan that does not include allowing the Bush tax cuts for the rich to expire.

    If they stick to that, come what may, we might actually be able to get some political leverage for a change.

  52. Someone here posted "Liberals, we cannot fix it by just raising taxes on the rich. They already pay nearly all the income tax, and if you double their rates, the economy will certainly crash. " I doubt it ! And, No one is talking about raising tax rates as a means to collect more revenue so we can borrow less, but IF they were, it wouldn't be to "double" the tax rate of the wealthy. I hear a lot of wealthy liberals say they are willing to pay more taxes. The way I understand it, wealthy people will still be wealthy even if they pay more taxes.

  53. So S & P, the new whipping boy for the big spenders, downgrades our credit rating because they "cited doubts about the ability of the two parties to bridge their gulf on fiscal policy." Oh, my. Now where did they get that idea?? ( think S & P learned a lesson from the housing loan fiasco; too bad our politicians haven't learned anything )

  54. The credit reporting agencies represent corporations and the uber rich as much as the Tea Party. Theyre not concerned about the poor and middle class. So I say Have You Seen Kay these guys and declare the recession a depression and start government spending to create jobs and wonder about making SnP happy later.

  55. Ralphpetrillo,

    I like your proposal. However, why tax (C.) organizations only once? Don't they benefit from government expenditures? Why not tax their revenues at the corporate rate of 6%?

  56. Devaluation or default?

  57. Interesting how S&P has become the problem to a lot of commentators here. Entitlement funding imbalance has been dogging the US for how many years now? Blame your politicians for giving away the store.

  58. Can't Obama spin his helplessness a little more to make all progressives feel better, sing Kum By Yah and be happy? He has dug himself into the worst hole any president in history has. He has combined absurd liberal moves (Obamacare) with the worst recession in modern history and has alienated every CEO.

    This is scary. He and the liberal democrats need to go.

    The S&P simply said on many broadcasts this weekend that the Tea Party did not bargain hard enough for true cost reductions. Funny part is, they got blasted by everyone here for going too far. When will America wake up and realize Beck is completely right.

  59. Please cut spending (welfare reform would be a wonderful start - how about mandatory drug testing???) and either: raise taxes; or engage in meaningful tax reform. Pretty please... or is that too crazy a request?

  60. Austerity for rich people!

  61. Growing up, I always believed that the lessons of the Great Depression had been learned: that banks needed to by regulated and that the government had to step in to provide jobs and infrastructure support in bad times. Instead we now have the religion of the Chicago school, which replaces economic reality with a faith-based market, Puritanical sacrifice (by others) and the worship of wealthy. Our titans have forgotten that businesses need customers, and to be customers, people need jobs.

  62. Like a lot of us, I'm wondering just who is pulling the strings here. The present decline is irrational and based upon emotion and/or someone's computer that threw a fit!

    No, times are not good and yes, we need to address our sea of red ink with increased revenue as well as spending cuts. However, we're hardly the basket case S & P is portraying. Perhaps S & P forgets their high quality ratings of AIG, Lehmann Broathers and more. I've got a clue for them. I haven't!

  63. Who is paying S&P for the downgrade? We know that S&P is a house of prostitutes. They will provide any rating needed provided you pay for it. Just look at Enron, Lehman, and of course the ever AAA GS subprime mortgage instruments. All these rosey ratings were paid for by the respective houses.
    WHO IS PAYING S&P NOW? shouldn't this be a matter for the public record?

  64. President Obama is so busy golfing, traveling, having parties at the White House, celebrating his birthday, that he doesn't have time to do the job he was elected to do...be the Executive in charge of making the Country work.

    He is completely inexperienced and we must assume, by his actions, hating the American way of life...capitalism. He wants to create a huge, over-bearing government and take control of EVERYTHING in our lives and run the economy into the ground. He is definitely a socialist/marxist and wants the US to be just another Third World Country. Who is going to make the money and pay the taxes when the majority of citizens are on welfare and government entitlement programs?

  65. I do not know whether President Obama and the Speaker were on the right track with their 4 trillion dollar deal that was rejected by the Republican Tea Partiers, but I do know that because of them and their inability to compromise, we are about to have another recession. I hope America remembers at the voting booths next year.

  66. S & P claims the deficit should have been cut by 4 trillion, and a balanced budget amendment to avoid the recent downgrade. Obama does what he always does- spin it, and unfortunately, once again the media isn't correcting him- this is exactly what Boehner and his fellow republicans fought so hard for, but were beaten down. Let's lay praise and blame squarely where they belong.

  67. It is Amazing how congress listens to S & P and not to the general public.

  68. Fact is that President Obama achieved what he wanted namely that
    the US should be more like Europe and that American exceptionalism does not differ from Greek exceptionalism, etc. But this achievement, may land him in history books as The Downgrade President and the country
    will struggle for decades to pay back the horrendous debt which keeps on growing.
    Remember that in November 2012.

  69. Let’s face it.

    1. Two parties each appoint half of the 12 member commission. Hardliners will be on both sides.

    2. Commission fails to agree on anything. Any surprise so far?

    3. Half of the cuts come out of social security, Medicare and other entitlements for the poor. This is what the Democrats lose and the poor pay.

    4. The other half comes out of Defense. This is when the military pays along with the poor because once this amount comes out of Defense we are back to the Draft. You cannot afford a military without a draft with that amount of money taken out so the draft is back. What exactly do the Republicans lose here?

    5. Each side can now blame the other for this non-cooperation in the next election.

    6. Politicians on both sides have a cover, rich pay no taxes, poor starve, poor get no medical aid and the military costs less because you do not have to pay draftees or give them retirement benefits. Of course the military can no longer win a war or defend the county either but rich people got planes to go elsewhere so it’s ok.

    7. Bet there is even a bill lurking somewhere to buy you way out of the draft like there was during the civil war.

    Can't have those rich kids dying along with the poor ones now, can we.

    The two party system is broken beyond repair.

    Political parties were not in the Constitution for a reason.

  70. Congress should just resign. They can just let the leaders of the biggest corporations and wall street bankers run the country. They do already, Congress is just entertainment to keep us distracted. Wealth has been continually concentrated in fewer hands, the S5P downgrade could have been avoided by raising taxes on those who have gained the most and sacrificed the least. Since they are in control of the media, they control the debate. The reality is that the whole western capitalistic system is unsustainable in it's current form. Creating artificial wants/fads and the like, this constant raping of the earth to make crap people don't need and just throw away when the next fad is created, advertised and sold. Now that we've got CHina and India doing this, the earth will soon be ruined. Government is about the only way people can protect themselves from monopolistic abuse. The sun is setting in the west, it's time for a new model for humanity.

  71. Read My Lips: Not Without New Taxes

  72. ~

    1. The President should announce that he will not seek a 2nd term.

    2. The President should put it all on the line and push Simpson-Bowles through. A NEW commission is NOT going to come up with anything better than this.

    3. Draft Hillary Clinton in 2012. We need Hillary and Bill Clinton back in the WH.


  73. So Milton Freedman and the Chicago School take over the USA with a crisis that was created to cause panic and support for the corporations to take it all.

  74. It all makes perfect sense if you realize that America is a corporatocracy. Until people wake up to this fact nothing will change. The sad part is that it's staring us right in the face and we can't see it. You can play the blame game forever but notice that not one politician ever does anything that will hurt the corporations he/she is beholden to. That's because they are just an extension of the corporation. In the old days individual tycoons were the people who controlled vast economic empires. Now it's faceless corporations who do so. Nothing has really changed. The goal is money/power then and now. All the rhetoric is just a smoke screen. We live in a corporatocracy with all of its inherent injustices.

  75. We need to start the process by getting Social Security and Medicare off the budget, set up separate trust funds that cannot be raided to subsidize overspending and make contributions to them based on expected payouts. Then they can be managed with independent boards not subject to appropriations.

    Second, the debt ceiling law needs to be eliminated because it brings into question the debt of the US which is prohibited by the 14th amendment. The law could preclude payment of debts authorized and appropriated by other laws.

  76. The left are demanding that "revenue" be part of any budget solution - going forward. OK, so can someone please explain why 51% of the current population is not paying any taxes? Forty nine percent of all Americans are funding the government and this includes the "rich", who have earned their wealth and are paying taxes. You want revenue? Let's re-write the incredibly confusing and complicated tax code and simplify it so that any 2nd grader can understand it. All Americans enjoy the freedoms and services that the federal and local governments provide. Everyone has to support the costs of these services. There are no free lunches. There's your revenue solution, now fix it.

  77. Get rid of the Bush tax cuts. Let the rich pay more; they are the least hurt by the coming downturn, as they don't lose their jobs when things get tight. Why is the GOP protecting them and dumping on the common person??? When there is a recession the services that are being cut are the ones most needed by the "working class".

  78. First and foremost, they are not "entitlements." They are the funds collected by the government to be returned in the form of retirement income in the future. That’s not "entitlements." “Entitlements” are the funds NOT being collected by the government on earned income, because of the obscenely low tax rate. Those “entitlements” should be used to shore up the infrastructure, support schools, and do what is necessary to create a society that supports all its people, not just the super rich. Making more cuts now, is the equivalent of putting the cement boots on the country and suggesting a nice swim in the ocean.
    Perhaps Standard & Poors should add the Tea Party symbol to its logo.

  79. If we must have a special panel to do the work the Congress is unable to do, shouldn't it be made up of respected and knowledgable economists and business leaders with proven track records? Selecting twelve clowns from a troupe that nearly brought the nation to default hardly seems a prudent choice.

  80. This entitlement they NEVER talk about. Let’s see them put it on the table.

    No one has been able to explain to me why young men and women serve in
    the U.S. Military for 20 years, risking their lives protecting freedom,
    and only get 50% of their pay. While Politicians hold their political
    positions in the safe confines of the capital, protected by these same
    men and women, and receive full pay retirement after serving ONE TERM.
    It just does not make any sense. The longer they serve the more they get.

    Now we’ve learned that the staffers of Congress family members are exempt from
    having to pay back student loans. This will get national attention if
    news networks will broadcast it. When you add this to the below, just where will all of it stop?
    For too long we have been too complacent about the workings of
    Congress. Many citizens had no idea that members of Congress could retire with
    the same pay after only one term, that they specifically exempted themselves
    from many of the laws they have passed (such as being exempt from any fear of
    prosecution for sexual harassment) while ordinary citizens must live under
    those laws. The latest is to exempt themselves from the Healthcare Reform... in
    all of its forms. Somehow, that doesn't seem logical. We do not have an elite
    that is above the law. I truly don't care if they are Democrat, Republican,
    Independent or whatever. The self-serving must stop.

    If each person who reads this will forward it on to 20 people, in three days,
    most people in The United States of America will have the message.. This is one
    proposal that really should be passed around.

    Proposed 28th Amendment to the United States Constitution:

    "Congress shall make no law that applies to the citizens of the United States
    that does not apply equally to the Senators and/or Representatives; and,
    Congress shall make no law that applies to the Senators and/or Representatives
    that does not apply equally to the citizens of the United States ."

    We’ve had enough

  81. If the Dems go along with the hoax that S&P's downgrade is reason to cut even more spending, we may as well just appoint S&P's board of directors as our government and declare the coup by the top 1% as complete.

  82. The economy has always been the real problem, and the main factor in increases in deficits and debt, yet here we are again focused on the debt in a way that will make the economy worse and thereby make deficits and the debt worse. It's the economy, stupid!

    But no, the republicans are tossing around their balanced budget amendment, something they push seriously only during democrat presidencies - now and Clinton but not during Reagan or either Bush; this is despite Reagan and Bush jr. increasing spending and deficits greatly over their democrat predecessors. How can anyone think this is not strictly political?

  83. I refer all members of all government to the Ruth Marcus essay of Aug 4 in the Washington Post


    There she furnishes a take-home exam that basically demands reality from any candidate for any election.

    I also suggest getting a few people on that committee who are from an average, not advantaged, background - who have strong connections to their relatives young and old, and who have shown that they can listen to more than the sound of their own voices.

    This whole ball of wax could make me very grumpy very soon.

  84. Let's see...
    Treasury to S&P - There was apparently a $2 trillion error in your analysis. We will let the magnitude of the error speak for itself.
    S&P to Treasury - It's not the math stupid, it's the dysfunctional politicians.
    Politicians just blame each other about the downgrade and do nothing to prevent continued problems in the future.
    Treasury market (downgraded by S&P) rallies on flight to quality originating from the downgrade of the Treasury market.
    ...so what else is new...


  85. The words "tax increase on the wealthy" never appear in this article. That is both outrageous and shameful. The article could have been written by Republican operatives.

  86. Why don't we keep cutting so we kill off the economy altogether. What the hell is wrong is wrong with our policy makers. We are DOOMED to oblivion. We let an agency that gave AAA ratings to derivative junk, what caused the collapse in 2008, downgrade US obligations. That agency should be shut down and the executives responsible put in jail, but oh no, no one is every accountable in this country. Now we're letting these freaks set the standards, while they take the market into a tailspin, and along with that our economic recovery. Now they get to dictate, I don't think should be.

  87. Wake up call to the big spenders. Not that anything would wake them up, but the people of this country had better stop falling for "audacity of hope" and "change" empty slogans. You cannot spend endlessly.

  88. Right. Overdo it. That'll work.

    Fact is they could rescind the bush taxcuts to save $3.8T/10yrs. The estimated savings by bringing the troops home from the mideast is $1T. That's$800B more than the S&P wants to see.

    SOOOO....they could do the textbook republican thing and NOT rescind the bush taxcut (10 yr estimate $700B) for incomes over $250K. They'd still meet the $4T mark. Let's see them try.

  89. And so the history will record this as the "Obama Downgrade" of our country's credit. It will record further that his party refused to acknowledge their fault, no matter what the evidence, no matter what the numbers. Shame.

  90. It is pure foolhardy to imply that the downgrade will bring a sense of urgency to the panel. That assumes rationality and pragmatism will prevail.

    This was, by the conservatives, intentionally orchestrated, pre-meditated, and strategically cunning to teach the President a lesson. Keep the economy in the doldrums and that should weaken the President's 2012 aspirations. It is in the interest of the Republicans to push the economy over the cliff. Forget brinkmanship. Anyone can see the behind the scenes gloating within the Tea Party and the Republican leadership. Mission accomplished. Market uncertainty achieved, fuel on the already anemic aggregate demand poured, blow to the wealth effect inflicted, misery index on the uptick. Who can ask for more. Let the President's appeals for compromise in favor of a "balanced approach" continue to ring hollow.

    After all, the number one objective of Mr. Mitch McConnell is to defeat the President. Country be damned. Whenever any institution is infested by illiteracy and incompetency disastrous consequences will inevitably be the legacy suffered by the less fortunate among us. The Republicans will remain intractible because it is not in their interest to do otherwise.

  91. After all those killed in Afghanistan last week why are we still talking about those insignificant boobs at S&P?

    Please, please, please lets get out of Iraq and Afghanistan now! There is not even one iota of a reason for us to be in these God forsaken lands getting our young men and women killed.

    I can't imagine what it must be like to lose a child in their prime of life.

    Every politician must be required to send a family member to the armed forces so they know the deep sorrow and deep worry of losing a child in a way they got us into.

    And Obama is now just as much to blame as Bush. He could've gotten us out when he was elected. Instead we are still there, spending billions we don't have and watching Americans die.

    Get Americans out now, not later, NOW!

  92. Rudderless - mast broken -- taking on water -- and the captains may
    as well be in drunken slumber

  93. "S.&P. Downgrade Is Seen as Adding Urgency to Debt-Cutting Panel"


    S.&P. Downgrade Is Seen as Adding to Excuse to Loot Entitlements!

  94. I wouldn't hold my breath on the committee coming up with much of anything other than a way to kick the can farther down the road for another congress to deal with. The Republicans are adamant about no increase in taxes and spending is pretty much protected by special interests.

  95. Apparently we need a "panel" as the Congress at large is too worried about "getting re-elected" to do this job themselves. Our country deserves better than 75% of the Congress can give us. Rome burns while they discuss steroids in baseball!

  96. The politicians responding to the news of the downgrade have proven with their remarks that the "gang of 12" will just be politics as usual. None have changed their minds about raising taxes. None of changed their minds about serious defense spending cuts.

  97. I have just finished reading the reader comments on this article, and I have come away from that experience with a feeling of frustration. Some of the readers (reflecting, I suspect, many of our political leaders) are playing the blame game. When faced with a problem of some great severity, their first reaction is to blame someone or something: Favorite targets of the blamers seem to be S&P, President Obama, members of Congress,Social Security and Medicare, Obamacare, the military etc etc etc.

    A second group of readers try to offer solutions, but they merely reflect the same old tired discussions that focus primarily on discussion of spending cuts versus revenue and tax increases, all with some degree of elaboration.

    We, as citizens of a nation facing a situation that is new to us, need to get beyond the blame game and the tired cliches that pass for solutions. These games and cliches do nothing more than reflect the past and the current ideological differences that are splitting our nation asunder. The serve only to reinforce old patterns of thinking and to buttress old patterns of behavior.

    But in order to engage in new ways of thought and action, we must first address some basic questions concerning the nature of our government and its responsibilities to the people that it both represents and that it serves. For it is the political question of government that be be addressed before we can find the solution to the economic problems that we must solve.

    There is really no need for me to rehash the arguments that have been raging for the past forty years as to the size of government. Those arguments are quite well-known by now. But with all due respect to our conservatives, discussing the size of government allows us to avoid discussing the nature of that government, regardless of its size. We as a nation, together with our political leaders, need to seriously look at the complexity of government in a nation of our great diversity.

  98. The markets are speaking this morning. I don't think the message is for Obama. It's for the Republicans who are bound and determined to do the wrong thing and to prevent any serious conversation. They want to smash Obama and don't care what else they break in the meantime. As of this writing, about 10:15 am EDT, the indexes are down between 2.5 and 3%.

    Thanks a lot Tea Party and all the naysayers.

  99. What? That's non-sense. The market reaction is largely a result of the very fact that we have cut spending durring an ongoing economic crisis. Because there is now no possibility of economic growth, the debt situation becomes unmanageable. Further cuts will simply exacerbate the problem. Welcome to the corporate feudal system, my fellow serfs.

  100. Fact of the matter is, this is only going to serve to drive the two parties further apart. Republicans have shown that they will, under no circumstances what so ever, be negotiable. All is will do is make them double down harder on cuts and no additional revenues. Now I'm not one who cares for the idea of higher taxes but I seen enough workable proposals and the taxes need not stay high forever. But right now we need to do something that both cuts and raises revenue. I'm not encouraged by reading how much weight the politicians are giving S&P rating along with the fact that they seem unwilling to take a critical look at S&P itself. Everyone else has and everyone who is not in politics says the same thing, "aren't these the same guys who..."
    Why is it that we seem to be able to look at it this way but these congressmen can't?
    Boggles my mind.

  101. This whole thing is an illegal usurping of the constitutional responsibilities of the congress. If this super committee can do all this, why are we wasting so much money on an inept congress?

  102. 'Tax the wealthy' income or assets? If the federal government raises taxes on new income, it shuts off economic gains and stunts growth assuring that no new wealth is created while those who are already wealthy lose nothing. That's why we hear about the wealthy who are willing to pay higher taxes because it cements the current class system. Unless new wealth is allowed to be created, economic opportunities for all levels will be stagnant; the opposite of what we really need right now. That's why the knee jerk 'tax the rich' doesn't actually work in practice. The wealthy who want higher taxes are self-serving elitists who simply want to make sure that no one new can become wealthy.

  103. Sadly, GOP--and more specifically "Tea Party" political dogma--has held the economy hostage. It's more important to them to oust the current occupant of the White House (who's Black!) than fix things. They negotiated the budget in bad faith, the same bad faith that was shown from 2009, starting with Cheney crawling away from the inauguration like a cockroach.

    Ironically, what the "Tea Partiers" are doing in holding government hostage is tantamount to the definition of domestic terrorism in Section 802(ii) of the "USA PATRIOT" Act. But who will act on it?

  104. Now there is absolutely NO CHANCE anything will get done, since GOP smell blood (misguided or not) and will insist on gutting SS (Solvent until 2037!) and medicare. I'm surprised they are not trying to abolish medicaid, without SINGLE CENT more from the rich, who has been clearly benefitting more from current tax system than lower/middle class.

    If any of you feel the urge to parrot GOP talking points ("more than half don't pay any taxes, blah blah.."), please don't, since that shows your short-sightedness. There are plenty of ways the rich gets benefits from taxpayer dollars, and the trend in redistribution of wealth should be clear enough sign that the rich has figure out how to game the system. I'm already hearing Bachmann screaming "Obama destroyed our military!" (your colleagues agree to it, ma'am).

    All S&P did is declare themselves to be a puppet to GOP interest. I'm feeling sick..

  105. You definitely cannot underestimate the harm done by the Congress that declared that it considers paying its bills a politically discretionary matter.

  106. "S.&P. Downgrade Is Seen as Adding Urgency to Debt-Cutting Panel"????

    The "logic" of that seems akin to raising the ransom pool after paying off a huge ransom to a hostage-taker? OR perhaps offering MORE money to a financial terrorist?

  107. If the S&P wanted to be honest and do the right thing they would downgrade themselves. Their track record of late has been a disaster. Perhaps, criminal. Let`s downgrade the S&P to what it is; a sham of a rating agency with a history of gross incompetence and greed.

  108. This dysfunctional Congress, who is going on VACATION????, has not even taken the time to discuss who will be on the lame "panel".

    Experts they will not be.

    They are the folks who got us in this mess and I am supposed to be confident they can get us out?????

  109. It's too late to be focusing on the deficit, the problem now is the debt.

    No point to be talking about REDUCING the deficit. It is now essential for congress to come up with a credible plan to ELIMINATE the deficit within, say, 5 years.
    Obviously it is not going to be possible to reduce the debt while the country is still running a deficit.

  110. English is my native tongue, and I paraphrase what Standard and Poor said. The main reason for the downgrade is our polticial squabbling casting doubt about medium
    range help. The deficit is long range. In spite of all the spin, the Republicans
    decided to create a crisis out of extending the debt limit, and they have brought on the consequences of their ruthless right wing agenda on the rest of us. Lest we forget, the game of chicken over the last month had one of the drivers a suicide bomber.

  111. Just wondering if the Departments of Energy, Education and Interior were to be cut in half, would we be adversely affected? What do hundreds of thousands of people who work there, do everyday. How necessary is it. Are they creating rules and regulations and then overseeing them? In other words, are they making work for themselves so they can keep their jobs? Why are we engaging in party warfare rather than each party working to fix the problem...too much government!

  112. Notice how the politicians keep talking deficit 'reduction' and never mention deficit 'elimination'? They simply refuse to be weened off their big-spending ways. The debt won't go away until we are operating at a surplus.

    Eliminating pork - line items inserted by individual representatives - would go a long way. It makes absolutely no sense to take federal tax dollars from individuals in a state, and then simply return that money to the state. Skipping (and eliminating) all the bureaucrats in that roundabout process would save a great deal as well.

    The debt cannot be reduced until the deficit is eliminated. Eliminate the debt and all that money that is currently used to pay interest could be used for realistic expenditures.

    It doesn't take an elite economist to see that. It should be easily seen by almost anyone.

  113. Heading into the financial disaster of 2008, S&P gave triple-A ratings to some of the Street's riskiest packages of mortgage-backed securities and collateralized debt obligations - right up to the end! Who are these people to say anything about the political process, messy as it is?

  114. Good! It's time to end all tax deductions and loopholes and lower all rates. 15% for all income above 30k/year and corporate taxes to 10%.

  115. Blame Bush and 30 years of Reagan.
    Blame Boehner and Cantor, and McConnell and Ryan.
    Blame the Tea Party, blame Palin and Bachmann.
    Blame, blame, blame.

    When will President Obama and his merry band of Democrats ever step up and do what they were hired to do? Lead.

    When will President Obama propose a budget that is not so laughable that the Senate (Democratic majority) rejects it 97-0?

    When will President Obama propose specific, real spending cuts and tax increases? Sure, some people will be upset, but isn't that what Obama was elected to do? Lead.

    Harry Truman said the buck stops at his desk. President Obama thinks responsibility (the buck) is a hot potato to be passed on to others who he can then blame. When does the blame game stop? When does President Obama start taking responsibility to get things moving?

  116. What event of the last two weeks leads anyone to believe that a "Downgrade Is Seen as Adding Urgency to Debt-Cutting Panel" that these fools with act responsibly????????????

  117. The banking sector is destroying business in the US. Roll back the rules that governed the banking sector to what they looked like when Reagan was President. The US government is also way bloated. Cut the budget in half. Just do it. Bring home the troops too and stop playing world police. Throw out the illegals or put them in jail. Just do this and the US will be back in the game. It's you politicians across this country who destroyed it. You have approved the madness that has brought this country to its knees. The American people is furious. Tea Party in 2012! And a knee in the crotch of the banking sector, again. It doesn't create anything but confusion and poverty.

  118. Most commentators seem to hate S&P, but no one, other than the "conspiracy is the fabric of life" crowd, is arguing that they are wrong. So I'll take it as consensus that S&P is right.

    One can then only hope that Simpson-Bowles is revived in its substantially entire form and used as a template for the Committee of 12. But if the Republicans stack their 6 on the Committee with Tea Party "no taxes on the table" stalwarts and the Dems counter with a "entitlements forever with no cuts" 6 pack, hello more downgrades.

  119. Pear's article is propaganda masquerading as reporting. First, naively thinking that cutting spending will reduce the deficit, Pear ignores the overwhelming evidence that cutting public spending in a downturn will worsen the slump. Look at Greece, Ireland, Britain, and the US both in 1937 and today.

    Second, Pear ignores the fact that the markets retain confidence in the US and US debt. Interest rates on US Treasury bonds continue at historic lows. And that is what matters, not the misguided opinions of a ratings outfit whose ratings errors helped create the recent financial crisis. (Paul Krugman's article today shows that S&P's record hardly entitles them to be listened to.)

    Yet, Pear attempts to gin up the S&P downgrade into a justification for massive budget cuts. These disastrous cuts would likely cause a recession, while damaging two federal programs vital to the middle class, Social Security and Medicare. No-one alive today has ever tried to live - or grow old - in a country without a strong pension and healthcare system for the aged. Historically, it was miserable for most.

    Finally, Pear trots out two non-sequitors. The first, that Republicans see deficits as an issue for them, merely hides the proven fact that since the 1950s deficits have been bigger (and the national debt risen) in Republican administrations more than Democratic ones) in favor of a myth. That kind of distortion is classic propaganda. This misrepresentation Pear accentuates with the half-truth that cuts to SS alienate liberals. That is true, as far as it goes, but SS did not cause or worsen the national debt. The half-way liberalism of Clinton's 1993 tax reform led to big surpluses and a rapidly falling debt.

    Instead, the article should inquire into S&P's bad timing. Why did they choose the weekend after the budget deal - right in the middle of serious turmoil in Europe - to make their move? With the euro in question, what could be more destructive?

  120. We have a BIG problem and let's fix it. We've spent enough time and words blaming one another.

    The Simpson-Bowles Commission proposal may have looked radical a few months ago but it seems we're ready for our medicine now.
    The thought of Congressmen/women arguing any more about procedure, mine, yours, not fair, posturing, posing, sound-biting, etc. will drive the voters insane. We cannot take any more of that.

    This Simpson-Bowles plan is already on paper. Let's go with it. No one will like it. We need it badly. Now.

  121. What is needed is some incentive to bring manufacturing jobs back to the US and start making consumable goods here at home. Certainly labor costs are a factor, but what about transportation costs? Especially since in many cases the raw materials are exported as are the finished goods. Of course what is overlooked is that the energy costs are subsidized by incentives, tax breaks, and military policy. Then of course the massive state and local government investment and tax breaks given to airfreight and shipping terminals. It's pretty obvious that government policies born out of corporate lobbying have created the unfair situation we are in.

    The other tragic irony is that since 9/11, we have wasted trillions for 'national security' while pursing policies that make us less secure. Globalization has led to erosion of the working class while enriching the corporate greedheads. We are far more vulnerable to market forces that impact energy costs, commodities, and investment cost. Our military has been weakened by endless wars operated off the balance sheet. Our education system has been battered by attacks on teachers and unfunded mandates that increase bureaucracy without improving education quality. Our health care system has been sold to the insurance and pharmaceutical industries.

    For 30 years we have been bombarded by ideological attacks that benefit Corporate America while weakening the majority of our citizens. And as the economic security of the middle class has eroded, we are being told that it is our 'sense of entitlement' that is crushing us. Don't believe it. We wouldn't be in this situation if the majority of the growth of the past 30 years went to the middle class instead of the top 10%, because you'd better believe we would have been fully taxed on them, while those who did were not.

  122. Can we at long last finally begin to tax the wealthy and the corporations? How about at 90% tax on windfall income over $100,000 and corpoaret profits over $1 million. The simple fact is that Americans need health care and a retirement safety net, as well as funding for arts and reproductive healthcare. We cannot pay for these things ourselves but must look to the wealthy to fund these fundamental rights. Thank you.

  123. The only appropriate word is arrogance to describe Krugman's column today and many NY Times comments. S&P didn't cause the crisis, and the incessant finger pointing just perpetuates the myth that our government isn't responsible. How about the guys who wrangled right up to the 11th hour then blew town for summer recess?

    Let's review. Since Nixon took us off the gold standard in 1971 we have experienced the largest credit expansion in the history of the world. For people who care to study the world's history of booms and busts, they would see a credit boom is always followed by a bust. It is inevitable. The government fueled the easy money boom, now we have to live with the bust.

    As David Malpass wrote in the WSJ, "Weak Dollar = Weak Economy". If the US wants to fix the economy, it needs to start by fixing the $USD. Instead we're doing exactly the opposite.

    Let's also review one previous instance of a government attempting to print and devalue their currency to get out of debt...the post WW I Weimar government. That little print and devalue episode nicely set the stage for a paper hanger and chicken farmer to seize control of one of the world's great powers.

    When a nation is in crisis experiencing bad economic times, extremists step into the power vacuum. It could never happen here though right?

  124. Yes, the United States has a debt problem - a huge percentage of its adult working population is unemployed, and another huge percentage is underemployed. The capacity of these people to pay taxes is severely curtailed as a result. Yes, the United States has a debt problem - the Republican Party, led by the Bushies, plunged the nation into turmoil by borrowing $1.4 trillion for two unfunded wars, borrowing another $1.8 trillion to give the super-rich massive tax breaks, and billions in unfunded Medicare drug benefits. Now, they got religion? A travesty put upon the nation solely because they feared angering their feeble-minded "no tax" base while Bush was in office, and now after plunging the nation into a recession following a near economic meltdown they largely caused through pure negligence, they want to balance the budget. What's happening today is 100 percent politics, nothing more. But should we feel a sense of urgency over S&P ratings? Hardly, considering the source. In fact, Standard & Poor's has zero credibility - as an investor, their ratings are essentially worthless. I mean, this is the ratings agency that gave AAA ratings to junk mortgage bonds. Who in their right mind would believe anything they had to say? I certainly will not be making any investment decisions based on their tarnished judgment. This is nothing more than pure politics - it looks as though S&P has become a quasi-political wing (a broken one, at that) of the discredited Tea Party.

  125. One just needs to look at the situation in England where the poor and disenfranchised are literally fighting back. The monarchy and corporate elites of England are enjoying record incomes. With Globalization in vogue, how can the American elite desire to change. It might be good if the republicans get all 3 houses of government to initiate their assault on the poor while protecting the rich. I am sure the American public will then take to the streets for change. A new active revolution for economic equality will be born, thus eliminating the GOP for a very long time!