"I got 98 percent of what I wanted"...Boehner’s Folly Leads To S&P Downgrade of US Debt

[jefferson_dem]

Boehner’s Folly Leads To S&P Downgrade of US Debt
By Matthew Yglesias on Aug 5, 2011 at 9:38 pm



I’m no expert, but I don’t think S&P downgrading its rating of US debt will, as such, have any really big practical implications other than becoming the next political football. If you look at S&P’s definition of the AA rating, after all, it says: “An obligation rated ‘AA’ differs from the highest-rated obligations only to a small degree. The obligor’s capacity to meet its financial commitment on the obligation is very strong.” Scared yet? Me neither.

The issue today continues to be what it was a week ago. For years now, if you look at a projection from CBO or OMB it shows a spending curve that steadily accelerates. It accelerates because the government currently pays for health care for old people and for poor people, and because the cost of health care services has been accelerating. Consequently, for a long time now it’s been clear that in the future either the US has to stop paying for old people’s health care, or else raise more revenue in taxes, or else reduce the growth in the price of health care services. And for a long time now it’s been unclear what combination of those strategies will be adopted. But people have generally had confidence that some combination of them would be adopted.

Once upon a time earlier in the Obama administration, I asked a senior official how he thought this would ever get resolved. A deal, everyone agreed, had to be bipartisan. But to be bipartisan, it would have to include tax increases. But Republicans wouldn’t vote for tax increases. He told me that of course that made sense, but at some point pressure from bond markets would be unbearable and Republicans would come to the table. Broadly speaking, that’s the thing that most people generally believed would happen. What we saw with the debt ceiling was a mini-test of that theory, and the theory failed. “No new revenues” wasn’t just a GOP bargaining position, it turned out to be something they were really committed to even in the face of an imminent financial crisis. You can see why that would dent confidence in the long-term fiscal trajectory of the country.

The person who looks bad here, in my view, is John Boehner. President Obama wanted to do a “grand bargain.” The Gang of Six Senators wanted to do a “grand bargain.” And it looked for a moment like Speaker Boehner was going to be part of a grand bargain. But ultimately he decided that he didn’t want to sign a deal that would fracture his caucus, so the grand bargain talks fell apart. And yet the little bargain that did eventually pass the House ultimately couldn’t pass with Republican votes alone. So what did Boehner really achieve? If he was ultimately destined to strike a deal with the White House that needed Democratic votes to pass the House, why not go for the grand bargain? According to Boehner “When you look at this final agreement that we came to with the white House, I got 98 percent of what I wanted. I’m pretty happy.” How happy is he now?

<SNIP>

http://thinkprogress.org/yglesias/2011/08/05/289867/boehners-folly-leads-to-sp-downgrade-of-us-debt/

[Peacetrain]

1. He now OWNS it.. (Boehner and the tea party perps)

[Imajika]

2. I don't think it is going to work that way...

The Obama administration originally called for a clean debt ceiling increase with no cuts and no taxes. The baggers will just say we wouldn't have even had cuts if it weren't for them.

On the upside, I think this is going to force an expiration of Shrub's tax cuts for the rich - and may even result in additional tax increases. On the downside, there will be overwhelming pressure to cut entitlements now.

[jefferson_dem]

4. It's not either or...

A clean debt ceiling bill and a "big" debt reduction plan such as Obama was proposing could have averted this. Note that S&P singles out the gridlock surrounding the debt limit debate, in addition to the absence of revenues, as a contributing factor.

[Imajika]

6. A clean debt ceiling increase would not have averted this...

S&P had already warned they wanted 4 trillion. There is no way around that.

The President can argue he wanted a grand bargain and revenue increases, but there is no way to get around the fact that initially they called for a clean debt limit increase with no cuts and no taxes.

As I said, this probably means the disgusting Bush tax cuts for the rich will be allowed to expire and may mean additional tax increases on the rich, but I can guarantee you that the pressure to "deal" (aka cut) Medicare and Social Security will be overwhelming.

[Dad Infinitum]

3. DOH!!

No more extortion please.

[jenmito]

5. This needs to be made into an ad ASAP with the clip of Boehner saying that followed by the news

reports of the downgrade following right after, with the dates shown on each clip.

[starroute]

7. Ooh -- "Boehner's Folly" -- I love that -- can we call it that forever?

It's got that nice classic ring about it.

[Tarheel_Dem]

8. K&R (nt)

[golfguru]

9. Demolition of AAA rating since 1917 is shared by

every president, every congress critter who voted to spend on unfunded items. The 98% Boehner's deal just broke the overloaded camel's back.