Democrats Find Excuse to Spend More and Borrow More from China

April 19, 2011

Democrats Use S&P Credit Rating Downgrade as an Excuse to Keep Running Up the Government Credit Card

Yesterday, Standard & Poor’s indicated it was downgrading its outlook on U.S. government debt to “negative” from “stable” over concerns that U.S. policymakers would be unable to successfully address America’s ongoing budget deficits, making clear its fears over “rising government indebtedness”:


“U.S. stocks fell sharply after Standard & Poor’s cut its outlook on the U.S. government, warning that the U.S. fiscal profile may become ‘meaningfully weaker’ than that of other major countries if policy makers can’t tame the budget deficit. …


The ratings firm surprised markets as it cuts its outlook on U.S. government debt to ‘negative’ from ‘stable,’ to account for budget deficits and rising government indebtedness. ‘We believe there is a material risk that U.S. policy makers might not reach an agreement on how to address medium- and long-term budgetary challenges by 2013,’ credit analyst Nikola G. Swann wrote.


” ‘The biggest fear we have is that politicians don’t take the prudent steps they need to get the deficit under control,’ Channing Smith, portfolio manager at the Capital Advisors Growth Fund said, calling the S&P move ‘overdue.’ He said his fund views the deficit as a three-to-five year problem that ‘could become a problem much sooner.’” (Brendan Conway, “S&P Warning Drags Down U.S. Stocks,” The Wall Street Journal, 4/18/2011)

STOCKS “POST BIGGEST DROP IN [A] MONTH” ON S&P RATING: “U.S. stocks were on track for a rout after Standard & Poor’s cut its outlook on the U.S. government… The Dow Jones Industrial Average was off session lows but still down 213 points, or 1.7%, at 12129 in early afternoon trading, with all components in the red. The Standard & Poor’s 500-stock index dropped 21 points to 1299, with industrials and materials stocks taking the hardest hit. It was both measures’ biggest one-day drop in about a month. The Nasdaq Composite fell 50 points to 2715.” (Brendan Conway, “Stocks Post Biggest Drop in Month,” The Wall Street Journal, 4/18/2011)

Unsurprisingly, Democrats responded with ideas made in Washington, to keep running up debt financed by China without finding spending cuts that could begin addressing America’s debt crisis:

ASSOCIATED PRESS: “WHITE HOUSE MINIMIZES S&P DECISION ON U.S. DEBT.” (“White House Minimizes S&P Decision On US Debt,” The Associated Press, 4/18/2011)

HOUSE DEMOCRATS SEIZE ON DOWNGRADE AS AN EXCUSE TO RAISE DEBT CEILING WITHOUT ACCOMPANYING SPENDING CUTS: “Separately, House Democrats seized on the report as an argument that the GOP should allow a ‘clean’ vote on a measure to raise the nation’s $14.3 trillion debt ceiling. Republicans have been demanding spending concessions from the administration in exchange for raising the debt ceiling.” (Erik Wasson and Bernie Becker, “Stocks plunge after S&P shifts rating on US debt to negative,” The Hill‘s On The Money Blog, 4/18/2011)

STOCK MARKETS ARE WORRIED, BUT AT LEAST DEMOCRATS AREN’T: “But House Democrats are still calling for a clean vote. Vermont Rep. Peter Welch sent a letter to Minority Leader Nancy Pelosi of California, Minority Whip Steny Hoyer of Maryland, Assistant Democratic Leader Jim Clyburn of South Carolina and Democratic Caucus Chairman John Larson of Connecticut asking to establish the party’s position ‘in favor of a clean extension of the debt ceiling.‘” (Jake Sherman, “GOP latches onto S&P rating,” Politico, 4/18/2011)
This comes a week after President Obama unveiled his own utterly unserious plan to address America’s budget deficits—only to have it panned widely by critics for its “blistering partisanship” and lack of fiscal honesty. What crisis will it take for Democrats to finally get serious about America’s debt crisis?:


FACTCHECK.ORG: OBAMA “UNCLEAR” ON METHODS TO CURB MEDICARE SPENDING: “Of course, Obama agrees that the government has to find ways to curb Medicare spending. But it’s unclear what exactly those methods would be.” (Lori Robertson, Eugene Kiely, and D’Angelo Gore, “FactChecking Obama’s Budget Speech,”, 4/15/2011)


ABC’s AMY WALTER: SPEECH NOT ABOUT “COMING UP WITH A BI-PARTISAN PLAN,” BUT “SETTING UP BATTLE LINES” FOR 2012: “This speech wasn’t so much about coming up with a bi-partisan plan to tackle the deficit as it was about setting up the battle lines for a 2012 campaign.


“While politicians on both sides of the aisle have stressed the need to ‘put it all on the table,’ the President made clear that he was leaving a lot on the floor. (Amy E. Walter, “Analysis: Obama’s Debt Speech Sounded Like Campaign Fare,” ABC News, 4/13/2011)


THE WALL STREET JOURNAL: OBAMA’S “BLISTERING PARTISANSHIP” IS “TOXIC”: “Did someone move the 2012 election to June 1? We ask because President Obama’s extraordinary response to Paul Ryan’s budget yesterday—with its blistering partisanship and multiple distortions—was the kind Presidents usually outsource to some junior lieutenant. Mr. Obama’s fundamentally political document would have been unusual even for a Vice President in the fervor of a campaign.” (Editorial Board, “The Presidential Divider,” The Wall Street Journal, 4/14/2011)


THE WASHINGTON POST: OBAMA SPEECH LACKED SPECIFICS, SUBSTITUTED PARTISANSHIP: Even as he savaged the GOP proposal, Obama was less than specific about his own.He did not say exactly how he would reform how corporations are taxed, what he would do to achieve a simpler tax system or which defense programs he would cut. On Social Security, he not only didn’t announce a proposal but would not say whether one was likely to be included in the final legislation.” (Perry Bacon, Jr., “Obama’s Budget Speech Has Partisan Tone,” The Washington Post, 4/14/11)