Rating agencydowngradeS U.S. credit rating to AA+

[onmyknees]

From S&P's press release regarding the credit rating:

Compared with previous projections, our revised base case scenario now
assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012,
remain in place. We have changed our assumption on this because the majority
of Republicans in Congress continue to resist any measure that would raise
revenues, a position we believe Congress reinforced by passing the act.



You can thank the bush tax cuts and the republicans

Gurl... are you misguided....( I'm being polite) But the original poster is just ignorant.

First of all....are these the same rating agencies who completely missed the housing bubble, that was years in the making, never said a peep about the 1 trillion stimulus, and now suddenly you're placing some importance on what they say? Let's get real....

Having said that, Moodys and S&P warned of a down grade during the debt ceiling discussions. They wanted 4 trillion in cuts over 10 years, and the deal didn't come anywhere near that. So they did nothing more than follow thru on their threats.
And as far as Obama and the Bush Tax cuts ( the liberals excuse for all evil in the world today), you might recall he extended them, then just months later was calling for more taxes. You voted for the guy....so perhaps you can explain the bifurcation...because I sure the fuck can't. If they are the root of all evil...why did he extend them and compound the problem? But here's a question for ya....what would be the point of more revenue (aka taxes) if the government is just going to piss it away anyway. Isn't that money better in the hands of the folks who earned it? How about a little fiscal discipline and stop the spending binge?
Look....Obama took a bad situation and made it far worse. That's oversimplified, but it's also a fact. If he had implemented the correct fiscal policies, we'd be on our way to a healing economy rather than another recession, 17% real unemployment, and a S&P downgrade. Case closed. He's not, and never was ready for prime time....you made the mistake, but we have to deal with the mess.

[Hebrew Hammer]

Increased tax revenue wont do anything until they reform the tax laws. Until then the most lucrative pockets will continue to hire Harvards best and brightest to dodge as much as possible.

[BellaBellucci]

Increased tax revenue wont do anything until they reform the tax laws. Until then the most lucrative pockets will continue to hire Harvards best and brightest to dodge as much as possible.

Well said. I owned a corporation for years, and I paid far less in taxes in relation to income when I was making $100,000 a year than when I was delivering pizza as a teenager.

~BB~

[AmyDaly]

did nothing more than follow thru on their threats.
And as far as Obama and the Bush Tax cuts ( the liberals excuse for all evil in the world today), you might recall he extended them, then just months later was calling for more taxes. You voted for the guy....so perhaps you can explain the bifurcation...because I sure the fuck can't. If they are the root of all evil...why did he extend them and compound the problem?

Obama didn't want to raise taxes on the middle class. Only the wealthy. Republicans held the bill hostage and said that they wouldn't agree to that. He made the decision to cave in to the republicans demands to not raise taxes on the wealthy in order to not hurt the middle class even more.

[Dino Velvet]

He made the decision to cave in to the republicans

I hear many from the left mention he does this way too often. I wonder if they feel that he is a strong principled leader.

[Ben]

Thank you, TEABAGGERS, YOU ^&^%^%^^&

These TeaBaggers are the real deal, as it were. They wanna cut spending on, well, everything. From Medicare to, well, military expenditures. I think the military should be reduced to decrease the size of the deficit. 72 percent of Americans think that the deficit should be reduced by raising taxes on the rich. But they don't count. Policy is carried out by the owners. And the owners wanna cut grandma's social security checks -- ha ha! I wish it were funny. But it isn't. The cuts will impact the most vulnerable members in our society.
Anyway, the markets, as it were, are nervous because of the likelihood of government spending cuts. And the state &/or government sector plays a mighty big role in the economy. So, massive military cuts would impact the economy. So, the speculation is "growth earnings" will go down with the government retreating from the economy.
The problem with the economy is lack of demand. So, well, someone whether it be government or business (who are sitting on $2 trillion in cash) have gotta kick start the economy. (The very good conservative economist Paul Craig Roberts has said we're in trouble and will stay that way as long as we continue to offshore jobs to China, to Indonesia, to Japan. NOT ONLY do you offshore your jobs. BUT you also offshore your tax base and your economy. This is a huge problem for America.)

[Hebrew Hammer]

Well said. I owned a corporation for years, and I paid far less in taxes in relation to income when I was making $100,000 a year than when I was delivering pizza as a teenager.

~BB~

Lol most everyone I delivered pizza with in college only did it to launder their pot money.

[Ben]

How to Think About Standard and Poor's Downgrade

by Dean Baker

Standard and Poor's downgrade of U.S. government debt captured headlines across the country and around the world. It is a newsworthy event, but primarily as another colossal failure by a major credit rating agency.
First, it is worth mentioning the important background here. S&P, along with the other credit rating agencies, rated hundreds of billions of dollars of subprime mortgage backed securities as investment grade. They were paid tens of millions of dollar by the investment banks for these ratings. We know that concerns were raised by their own people about the quality of many of these issues. This was at the least astoundingly incompetent. It was quite possibly criminal.
This raises the question of whether S&P fears an investigation and possible prosecution. In such circumstances the desire to curry favor with powerful politicians could certainly influence their credit rating decisions. There are also rules affecting the credit rating agencies in the Dodd-Frank financial reform bill. The desire to have these rules written in a favorable way could affect the credit rating agencies' decisions. It would be nice if we could just assume that the credit rating agencies make their rulings on an objective assessment of the evidence, but we can't.
Let's look at the evidence. S&P made a big point of citing the fact that the debt deal did almost nothing to slow the growth of Medicare and other entitlements, obviously alluding to Social Security. S&P surely knows that Medicare's cost growth is driven by projections of explosive growth in private sector health care costs. The projections it relies upon from the Congressional Budget Office show that the cost of providing health care to an average 65 year-old in the private sector will be almost $20,000 (in 2011 dollars) a year by 2030. Of course, this will make Medicare unaffordable if it proves true, but this projected explosion in health care costs will be devastating for the U.S. economy even if we eliminated Medicare and other public sector health care programs altogether.
If S&P were being honest, it would have written about the need to fix the U.S. health care system. Instead it talked about the need to cut Medicare. Of course, if U.S. health care costs were comparable to those in any other country in the world, then we would be looking at massive surpluses in the long-term, not deficits.
The reference to Social Security also cannot be supported. The program is financed by its own designated tax. Under the law, if benefits exceed the money raised by the tax, then they are not paid. If S&P assumes that Social Security will add to the deficit in future years, then they are assuming that Congress will change the law in a way that no one is now proposing.
It is also worth noting that the projected increase in Social Security as a share of GDP over the next 30 years is 1.6 percent. This is roughly the same as the increase in the annual military budget since the days before September 11th. An unbiased credit rating agency would not be highlighting one increase while ignoring the other.
There are other problems with the S&P downgrade. U.S. government debt and its derivatives (e.g. the $5 trillion of mortgage backed securities issued by Fannie Mae and Freddie Mac) are the backbone of the U.S. financial system and indeed the world financial system. If U.S. debt is in fact less creditworthy, then all the banks and financial companies that rely on its value should also be less creditworthy. Yet, we didn't hear of J.P. Morgan, Goldman Sachs and the rest being put on the watch list for a downgrade. Why not? Perhaps this is because S&P doesn't take its own rating seriously.
Finally, what does the risk of default on U.S. government debt mean? The debt is issued in dollars. That means it is payable in dollars. The U.S. government prints dollars. This means that if some reasons the government was unable to tax or borrow to raise the money to pay its debt then it could always print it. This may carry a risk of inflation, but S&P is not in the business of making inflation predictions, they are in the business of assessing the likelihood that debt will be repaid. (Of course if they are worried that inflation will erode the value of U.S. debt, S&P would also have to downgrade all debt denominated in dollars everywhere in the world.)
In short, there is no coherent explanation that can be given for S&P's downgrade. This downgrade was not made based on the economics. We can only speculate about the true motive.


© 2011 Huffington Post

[onmyknees]

Again....let's put this in perspective and not try to make political points out of this because frankly you sound ignorant doing so....This is the same rating agency that thought it was a good idea not only to peddle mortgages to people who could never pay them, but to also bundle them together, and allow Big Wall Street Brokerages and Banks to sell them as investments, and thus collapse the US economy....then thought it was a good idea we bail those same banks out...starting to get the picture? So let's be careful pointing to them as though Moses is sending us a message from the heavens....Here is what an official from S&P actually said for what it's worth....When you libs have nothing to offer with what you've done for the economy, by all means play the blame game..it worked so well for you in the 2010 elections ! And notice that Mr. Chambers references the Ryan budget ( yea that Tea Bagger) and the President's much touted Boles-Simpson commission that he completely discarded...so who ya gonna blame now? Some of you really need to take some night courses in economics. Read what S&P actually said....


A top official at Standard & Poor's pushed back Saturday against the Obama administration's criticism that their decision to downgrade the nation's credit rating was based on "flawed" math.
The administration had tried to prevent the downgrade announced late Friday by telling S&P that the agency had made a $2 trillion error in its calculations about the downgrade, But John Chambers, managing director and chairman of S&P's sovereign ratings committee, explained to Fox News on Saturday that the downgrade was "motivated by a number of factors."
Related StoriesU.S. Loses AAA Credit Rating From S&P

"One was the political gridlock in Washington, which make us think that it's going to be difficult for elected officials to put the fiscal profile of the U.S. government on a long-term sustainable path," he said.
"And part of it was because of the fiscal path itself," he said, explaining that U.S. debt accounts for 75 percent of gross domestic product and will "trend up over the next decade unless we get additional fiscal measures than what we have on the table right now."
The agency was also worried that the eleventh-hour budget deal reached last weekend fell short of S&P's expectations, he said. S&P was seeking $4 trillion in budget cuts over the next decade. But Congress passed a plan on Tuesday that slashes up to $2.4 trillion in cuts over that time.
"If you get to the $4 trillion figure -- which had been mentioned by the Bowles-Simpson commission, which had been mentioned by the president in his April 13 speech, which had been mentioned by Paul Ryan in his alternative budget -- that, if you have decent growth behind it,would have done the trick," Chambers said.
Some Democratic lawmakers reacted to the downgrade by attacking S&P's credibility.
"I find it interesting to see S&P so vigilant now in downgrading the U.S. credit rating," said Sen. Bernie Sander, a Vermont independent who votes with Democrats.
"Where were they four years ago when they, and other credit rating agencies, helped cause this horrendous recession by providing AAA ratings to worthless subprime mortgage securities on behalf of Wall Street investment firms?" he said. "Where were they last December when Congress and the White House drove up the national debt by $700 billion by extending Bush's tax breaks for the rich?"
Massachusetts Rep. Barney Frank, the top Democrat on the House Financial Services Committee, said that the rating agencies have a horrible record and people should pay no attention to them.
But Chambers said the agency's record speaks for itself.
"Standard & Poor's, if you count its predecessor companies, has been ratings bonds since the 1920s. We have a long track record of over 100 years," he said, adding that none of the sovereign bonds that have received one of the top ratings in the U.S. since 1975 have defaulted.
S&P is the only one of the world's three major credit rating agencies to downgrade U.S. debt. But Moody's and Fitch have issued warnings of possible downgrades.
The White House said Saturday that President Obama in the coming weeks will "strongly encourage" members of Congress to "put our common commitment to a stronger recovery and a sounder long-term fiscal path above our political and ideological differences."

[onmyknees]

Obama didn't want to raise taxes on the middle class. Only the wealthy. Republicans held the bill hostage and said that they wouldn't agree to that. He made the decision to cave in to the republicans demands to not raise taxes on the wealthy in order to not hurt the middle class even more.

Really? What do you consider "wealthy"? I think you're probably wealthy Amy...are you doing your share? Again his ability to demagogue knows no bounds...he talks about "millionaires and billionaires" and corporate jet owners, but his threshold is 250 K. In New York, and I suspect California that's a working couple of a high school principal and a police captain...or a union welder, and mid level manager.....that's hardly a billionaire. And please understand that a portion of those at that 250K threshold are small business filing as individuals...and those at the 250-300K level greatly outnumber those "millionaires and billionaires"
You see with Obama...it's never really what he says...

So let's do the math....let's say a Doctor meets the 250K threshold...that means gross, not net. He pays....( and these are approximate , but close enough for HA math )

35 % Federal Income Tax
10 % State income tax
5% NYC tax
8% SSI
3% Medicare Tax

If he lives in an apartment, he gets no mortgage deduction....plus he has to pay all his insurances...Do the math sweet Amy. How much of his pay would you and the libs be happy with? If you're calling for higher taxes, you need to answer that question.

And may I remind you...you might not call it a tax, but I sure the fuck do...my health insurance has gone up exponentially , and will continue to go up to support all the new mandates of Obama Care. That's a tax baby by any other name. How about you stop spending before you start asking other Americans to kick in 75% of their hard earned money?