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Karl Rove: Setting The Bar For “Success” Too Low

Karl Rove’s new Wall Street Journal column is all about House Speaker John Boehner’s (R-Ohio) “surprising success” so far in 2011. As Rove sees it, Boehner has had a “remarkable run” by having “out-maneuvered” President Obama repeatedly.

Mr. Boehner may not be an inspiring orator, but he has moved the country and Congress in his direction. He has succeeded in large part because he had a more modest view of the post than his recent predecessors. […]

So Washington’s agenda this fall will reflect the priorities not of the glitzy Mr. Obama but of the modest, well-grounded Mr. Boehner.

Rove’s larger point seems to be that Boehner — or at least Boehner’s caucus — is largely dictating the agenda in Washington, and there’s obviously some truth to that. By refusing to compromise, adopting an unyielding right-wing agenda, and normalizing extortion politics, House Republicans have had considerable success, at least insofar as they’re dictating terms and fighting debates on their turf.

But Rove’s column comes across as kind of silly if one stops to think about the larger context.

For all of Rove’s gushing about the Speaker’s “surprising success,” Boehner’s tenure has been a seven-month-long fiasco. The Speaker has routinely struggled to keep his caucus in line behind his leadership, for example, and has found in many key instances that House Republicans simply don’t care what Boehner thinks. Whereas the Speaker traditionally is one of Washington’s most powerful players, Boehner is arguably the weakest Speaker we’ve seen in many decades — he’s not leading an unruly caucus; his unruly caucus is leading him.

Indeed, Rove seems especially impressed that Boehner has blocked White House attempts at additional revenue. What Rove neglects to mention is that Boehner was fully prepared to make an agreement with Obama for additional revenue, only to find that the Speaker’s caucus would forcefully reject the compromise.

What’s more, looking back at Boehner’s “successes,” it’s hard not to notice that Congress hasn’t passed any meaningful legislation at all this year — and in all likelihood, the Speaker will help oversee a Congress in which nothing of significance passes at all.

What have we seen from Boehner’s chamber since January? Five resignations, zero jobs bills, two near-shutdowns, no major legislative accomplishments, and the first-ever downgrade of U.S. debt, attributed almost entirely to the antics of Boehner’s Republican caucus.

Also note, thanks to Boehner’s sterling work, Congress now has its lowest approval rating in three decades, and Boehner’s personal approval ratings are spiraling in the wrong direction.

If Rove finds this impressive, I’m afraid he’s set the bar for “success” much too low.

 

By: Steve Benen, Contributing Writer, Washington Monthly Political Animal, August 25, 2011

August 26, 2011 Posted by | Congress, Conservatives, Debt Ceiling, Economy, Elections, GOP, Government, Government Shut Down, Ideologues, Ideology, Jobs, Lawmakers, Middle Class, Politics, President Obama, Public Opinion, Republicans, Right Wing, Standard and Poor's, Tax Increases, Taxes, Teaparty, Unemployed | , , , , , , , , , | Leave a comment

An American Hijacking: Eric Cantor Acknowledges S&P’s Warnings But Urges Colleagues To Ignore Them

Standard & Poor’s decision to downgrade the United States’ credit rating Friday night came with clear shots at congressional Republicans who had refused to consider tax increases in the deal to raise the debt ceiling. S&P criticized Congress for allowing new revenues to drop from the “menu of policy options,” criticizing “the majority of Republicans in Congress [who] continue to resist any measure that would raise revenues.” The National Journal proclaimed it “hard to read the S&P analysis as anything other than a blast at Republicans.”

Unlike his party’s presidential candidates and several of his congressional colleagues, House Majority Leader Eric Cantor (R-VA) seems to have heard that blast, as he sent a memo to congressional Republicans today acknowledging S&P’s calls for tax increases. Despite hearing those calls, however, Cantor is urging his colleagues to ignore them:

Over the next several months, there will be tremendous pressure on Congress to prove that S&P’s analysis of the inability of the political parties to bridge our differences is wrong. In short, there will be pressure to compromise on tax increases. We will be told that there is no other way forward. I respectfully disagree.

As we have said from the beginning of the year, the new Republican Majority was elected to change the way Washington does business. We were not elected to raise taxes or take more money out of the pockets of hard working families and business people. People understand Washington can’t keep spending money that it doesn’t have. They want to see less government – not more taxes.

Not only has Cantor chosen to ignore S&P, he has his facts wrong about the American people. Polling conducted by the New York Times and CBS News found last week that half of Americans did, in fact, support the inclusion of new revenues in the debt deal, and numerous polls have shown wide support for ending the Bush tax cuts for the wealthy, a proposal that would reduce the federal deficit by $830 billion over the next decade. S&P today called the full expiration of the Bush tax cuts, which would save $4 trillion in the next decade, one of the major steps in restoring the nation’s AAA credit rating.

Given that S&P downgraded the U.S. in part because of political instability brought on by the GOP taking the economy hostage, Cantor urging his colleagues to ignore the agency’s warning likely won’t help the government’s attempts to avoid yet another downgrade in the future.

By: Travis Waldron, Think Progress, August 8, 2011

August 9, 2011 Posted by | Class Warfare, Congress, Conservatives, Consumer Credit, Debt Ceiling, Debt Crisis, Democracy, Economic Recovery, Economy, Elections, GOP, Government, Government Shut Down, Ideologues, Ideology, Lawmakers, Politics, Republicans, Right Wing, Standard and Poor's, Tax Increases, Tax Loopholes, Taxes, Teaparty, Terrorism, Voters | , , , , , , , | Leave a comment

Standard And Poor’s Goes Tea Party

Big headlines for a Friday night: “U.S. Loses Top Credit Rating!” Yes, as most now know, Standard & Poor’s went ahead with its warnings of the past weeks and downgraded the sovereign debt of the United States government from its pristine triple-A to a still stellar but one notch less so AA+. And after a miserable week in global equity markets that was almost as ugly as it gets, a week that began with the conclusion of a universally reviled debt-ceiling deal, the late-night downgrade was the fitting end.

The symbolism is undeniable. This is the first downgrade in history, as commentators rushed to remind us. But of course, that history goes back only to the late 1930s, when the ratings agencies began to hold sway. And S&P is the only one of the major three—Fitch, Moody’s, and S&P—to downgrade. So this was big bad news, a bad coda to a bad week, but only as news and not as a trenchant analysis of the creditworthiness of the United States or its ability to meet its debt obligations going forward.

Let’s be clear: Congress and the White House did not cover themselves with glory during the debt debate throughout July. The United States has a stalled economy and a large amount of debt. But on so many levels, this downgrade is absurd.

First there is the question of math. When S&P informed the White House of its intention to downgrade on Friday afternoon, the Treasury Department took issue with S&P’s math and claimed that their assessment of the trends of the U.S. debt burden and its ratio to GDP was off by trillions of dollars. No matter. After a brief review, the wizards at S&P went ahead and removed an A.

A news ticker reads “Standard & Poor’s downgrades US credit rating from AAA to AA+” in Times Square on August 5, 2011 in New York City., Andrew Burton / Getty Images

Second, what’s with the fetish for a so-called proper ratio of debt-to-GDP. Academic economists have done no favors here. Carmen Reinhart and Kenneth Rogoff have become the go-to economists for their work showing how countries that reach a 90% ratio slide into recession and see slowing growth well before. The U.S. current level according to S&P is 74% and will rise to 85% by 2021. The explanation of the downgrade closely tracks this academic logic.

I have no criticism of an academic theory about how nations function economically. But when debatable theories become the underpinnings of decisions by unelected individuals who run organizations with significant sway (sway ceded to them by governments throughout the 20th century), then we have a problem. We have a problem when that argument gives short shrift to the debt-servicing burden. The current interest rate that the U.S. government pays to service its massive debts is hovering around 2.5%, which makes interest payments as a percentage of GDP as low as they have been since the mid-1970s.

Servicing the debt does not enter into the analysis, yet that and current interest rates make all the difference. Dismissing that counterargument, warning that rates will of course rise (yet even if they double, that will still leave the U.S. more than able to meet its obligations), and drawing on theories about the “right” level of debt puts S&P in a strange bedfellow alliance with the Tea Party.

The people who run the ratings agencies are welcome to their analysis, as is the Tea Party. But if Rogoff and Reinhart or the Tea Party announced that they were downgrading U.S. sovereign debt, they would be laughed for their audacity. Yet when it is one of the anointed ratings agencies, there is this sudden need to genuflect.

This is largely because covenant after covenant in both SEC rulings and institutional money management (pensions especially) dictate that many types of capital can only be invested in credit-worthy instruments as determined by Moody’s, S&P and Fitch. The downgrade doesn’t remotely begin to threaten the “investment grade” status of U.S. debt, and there is little reason to suspect that borrowing costs will go up as a result. Still, the reason we are in this situation of having to genuflect to S&P is because an entire structure of credit and investments, and the issuance and purchase of bonds above all, has been built on the shaky and questionable foundation of the ratings agencies.

The worst part of the downgrade is this: S&P spent considerable time in the body of their explanation about debt and GDP and growth. But they didn’t lead with that. That wasn’t the kicker. No, this was: “the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges.” The company assailed the Washington culture of “brinkmanship” so in display during the debt ceiling fiasco, and used that as the primary reason to take us down a notch.

Excuse me, but since when is a pristine political process a key ingredient to good credit? Are we supposed to have civil politics in order to maintain the rating? Are we supposed to have some mythic Scandinavian concord? Washington has usually been a mess, and arguably more now than ever. Nonetheless, the great distortion of the debt-ceiling imbroglio was that failure to do a deal would have led to a default. It would have led to a partial and then increasing complete shut down of the government, which would have soon enough forced a resolution. At no point would there have been insufficient tax revenue to meet the $20 billion of so in monthly interest payments on the debt, unless the crisis had gone on for months and months, which barring collective national psychosis simply could not have happened.

So S&P doesn’t feel comfortable that the American political process is conducive to dealing with long-term debt issues and so issued a downgrade. Yet S&P is a ratings agency, not a political arbiter. Olympic judges rule on athletic aptitude, not the politics of the athletes (usually). There is not a scintilla of evidence that the political process has yet impeded the ability of the United States to meet its debt obligations, even with the debt ceiling brinkmanship. The political process may indeed be contributing to the morass of the American economy, but the larger causes are the challenges of emerging economic centers and changing patterns of global commerce. Those are long-term issues that have little bearing on current ability to manage debts.

Finally, as a symbol that the United States is sliding off the rails, the downgrade is potent. It’s hard to argue with the reality that America is in a challenging moment that looks and feels a lot like decline. Whether that proves false and a new dawn awaits, we’ll find out soon enough. But the actions of S&P are part of problem and not just an independent verification that one exists.

These agencies have been elevated to heights that should not ascend; they have been chronically wrong and late in the past; and their rationale for a downgrade sounds more like a prim distaste for a dysfunctional political process that a reasoned assessment of the ability of the United States to discharge its obligations. No defense can be offered of our current political system or near-term economic prospects. But S&P—already on overreach as “neutral” judge of American creditworthiness—has no special standing to rule on the political system, and using that as a cudgel to prove their own power is a destructive act.

 

By: Zachary Karabell, The Daily Beast, August 6, 2011

August 7, 2011 Posted by | Congress, Conservatives, Consumers, Debt Ceiling, Debt Crisis, Deficits, Democracy, Economy, Federal Budget, GOP, Politics, Republicans, Right Wing, Teaparty | , , , , , , , , , , , , , , | Leave a comment

   

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