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April 19, 2011

Blame Obama and the Democrats for S&P Downgrade - But Mostly Obama

Topics: Political News and commentaries

As most are by now aware, yesterday the credit ratings agency Standand & Poor placed a negative outlook on the future of America's AAA debt rating as a result of looming budget deficits as far as the eye can see. As Erick Erickson notes over at RedState, for the past year, the Democrats have spent freely arguing that their free spending ways did not matter. In fact, Barack Obama's proposed budget for 2012 increases the national debt to 116% of gross domestic product, even while adding $2 trillion in tax increases.

However, as Erickson also notes, it was Barack Obama's disastrous speech last week that broke the camel's back:

... The President's open hostility to an adult plan while offering no substantive plan of his own was the straw that broke the camel's back. And because Mr. Obama still cannot deal with the issue as an adult, we will keep heading down this treacherous road.
Interestingly, last night on Fox News Charles Krauthammer said essentially the same thing (hat tip - NewsBusters):
CHARLES KRAUTHAMMER: I don't think what S&P issued was a plea. I think what it issued was a review, and it was a review of the President's speech. This is not about whether there'll be an agreement on the debt ceiling as the White House would like to pretend. What we heard from S&P is this is about will there be real deficit reduction agreed to by the President and the Republicans. It has to be agreed between them, because one controls the White House and the other controls the House of Representatives, and their answer is "No." And this credit rating is not in jeopardy today. It is an outlook, but what it means is there is a one in three chance it is saying today that within two years it's going to have to downgrade American AAA rating, which would be a shock to the system unlike any we've ever had.

... the debt ceiling vote is not what this S&P forecast is about. It's about what are the prospects of getting control of the debt itself. And the answer is "Little." And the reason is the Wednesday speech, the beginning of a campaign kickoff. That is why the President is out in the country now. That was not a speech about reducing the deficit. The numbers the President offered were suspended in air untethered to anything. That was a kick in the teeth at Republicans with incidentally the House leadership and Ryan sitting in front of him. It was not an invitation to any negotiation. It was a way of saying, "You walked into my trap, I'm going to now attack you from now until Election Day."

... There was nothing economic that happened last week other than the President's speech to precipitate this action by S&P. If the agency had been disappointed by the 2011 budget agreement reached by Republicans and the White House on April 8, this negative outlook would have been issued last Monday.

Instead, the ratings agency likely waited to see how the President was going to respond to Congressman Paul Ryan's (R-Wisc.) 2012 budget proposal, and clearly wasn't pleased with what it saw.

This is now two credible deficit reduction plans this White House has chosen to ignore with the first being offered in December by the President's own debt commission.

Meanwhile, as Barack Obama and his fellow Democrats continue to sink our economy, move us ever-closer toward stagnation, force food prices to all-time highs with misguided energy policies, and work toward wiping out our nation's credit rating ... the Democratic respond would with political spin that would make George Orwell proud.

Posted by Richard at April 19, 2011 6:22 AM



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