Treasury Dept.: Downgrade flawed by $2-Trillion error

[vonarrow]

http://www.progressivepeoplepower.com/index.php?itemid=53
Jobs & Economy Blog
Treasury Dept.: Downgrade flawed by $2-Trillion error

The U.S. Treasury Dept. said "A judgment flawed by a $2 trillion error speaks for itself."

vonarrow sez: "This was a political act (and a $Billion side bet) by Standard and Poor, aimed at President Obama. The other two credit reporting agencies didn't issue any such downgrade - S&P is the same group of crooks who issued TRIPLE AAA credit ratings to all these failed mortgage securities. S&P was complicit in the big Wall Street fiasco. Since the S&P announcement, Republicans have issued a Pahvlovian-type response, railing against President Obama, blaming Obama for this downgrade. CNN and other cable media pundits are literally slobbering all over themselves editorializing how this downgrade is going to negatively impact President Obama's re-election bid. It's a big ole media chorus, ya'll. Republicans couldn't stand how Obama has been seemingly bullet-proof against their failed political attacks and failing economy; so this was a move they felt would stick against Obama's re-election run. Standard & Poor has no business whatsoever making political power plays and demands. President Obama should respond by putting the U.S. government as a side-by-side competitor against the other three credit agencies in issuing credit ratings. Republicans continue to wage war against the poor and Middle Class America, for cash and prizes."

http://www.ProgressivePeoplePower.Com
Robert Reich: "We don't have a budget crisis. We have a jobs and growth crisis. Standard & Poor's has warned it will downgrade the nation's debt from a triple-A to a double-A rating if we don't tend to the long-term deficit. But, as I've noted, S&P has no business meddling in American politics - especially since its own non-feasance was partly responsible for the current size of the federal debt (had it done its job the debt and housing bubbles wouldn't have precipitated the terrible recession, and the federal outlays it required)."
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Treasury Dept.: Downgrade flawed by $2-Trillion error
By David Hancock
(Credit: CBS)

The Obama administration wasted little time in firing back at Standard and Poor's history-making downgrade of U.S. debt.

Late Friday, a Treasury Dept. spokesman told CBS News' Mark Knoller that "A judgment flawed by... ... a $2-trillion error speaks for itself."

It was the first salvo in what will likely be extensive damage control by the Obama Administration, which now goes down in history as the first presidency to have a credit downgrade occur on its watch.

S&P cited "political brinksmanship" from both parties in its downgrade.

S&P downgrades U.S. debt
S & P statement on downgrade of U.S. debt

In as statement released Friday, S&P said: "The political brinksmanship of recent months highlights what we see as America's governance and policy making becoming less stable, less effective, and less predictable than what we previously believed."

"Republicans and Democrats have only been able to agree to relatively modest savings on discretionary spending while delegating to the Select Committee decisions on more comprehensive measures. It appears that for now, new revenues have dropped down on the menu of policy options. In addition, the plan envisions only minor policy changes on Medicare and little change in other entitlements, the containment of which we and most other independent observers regard as key to long-term fiscal sustainability."

President Obama met with Treasury Secretary Timothy Geithner on Friday before heading to Camp David for the weekend.

The credit rating agency announced Friday that it is cutting the country's top AAA rating by one notch to AA-plus. The credit agency said late Friday that it is making the move because the deficit reduction plan passed by Congress on Tuesday did not go far enough to stabilize the country's debt situation and that the policymaking is not stable or effective as needed to address the current economic challenge.
http://www.cbsnews.com/8301-503544_162-20088959-503544.html

[Ruby the Liberal]

1. Oh FFS. There is no GD math error!

White house says "trust us, this time we really will let the Bush tax cuts expire"

S&P says, "we will believe it when we see it, and as such, will not be including those revenues in our analysis until it happens"

White house then spins this into a $2T "math error".

God, the bullshit on this one is beyond stupid.

S&P statement: "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."

[bhikkhu]

2. "most independent observers" say SS and Medicare must be "contained"?

...it sounds like S&P has been drinking the kool-aid at Koch's little get-togethers. Does a credit reporting agency that plays politics, and historically has such a lousy record, somehow still get to dictate policy?

[flamingdem]

3. Robert Reich is RIGHT ON TARGET with his analysis, what does S+P have to do w/a short term spat?

Well only that they have a republican agenda and want to get rid of Obama.

[Ruby the Liberal]

4. By calling for increased revenues?

Ok. :crazy:

[flamingdem]

5. Still waiting for your numbers Rudy nt

[Ruby the Liberal]

6. Ruby, and here you go. $1.8T lost, $3+T going forward

Revenue lost:



Anticipated revenue to continue:

"The cost of extending all the tax cuts over 10 years would have been $3.7 trillion."

http://money.cnn.com/2010/12/07/news/economy/tax_cut_deal_obama/index.htm

"Treasury estimates the costs of making the tax cuts permanent for everyone is $3.7 trillion over 10 years."

http://money.cnn.com/2010/09/15/news/economy/bush_tax_cuts_faqs/index.htm

""The 2001 and 2003 tax cuts added about $1.7 trillion to deficits between 2001 and 2008. Because they (were) financed by borrowing — which increases the national debt — this figure includes the extra interest costs resulting from that additional debt. Over the next decade (2009-2018), making the tax cuts permanent would cost $4.4 trillion, assuming that the tax cuts remain deficit-financed."

http://www.politifact.com/truth-o-meter/statements/2009/jun/24/paul-krugman/bush-tax-cuts-health-care-probably/

[Ruby the Liberal]

7. So, care to show me your source as to why $900b should be the number?

My numbers came from Treasury (with an AMT adjusted quote from Paul Krugman based on Treasury).

Looking forward to seeing your source.