What's with the US budget and recession stuff?

[KrazyHorse]

It's a pretty bald-faced attempt by S&P to remain relevant

FTFY

[Jon Miller]

While I support the idea of minimum wage, and think it is good that minimum wage has been so high in recent years, we should consider dropping it to help us out of the recession (as the economy is different than when I supported raising it).

JM

[Ben Kenobi]

It's a pretty bald-faced attempt by S&P to use their power to affect US policy decisions.

America's at 97 percent debt to GDP. This was long overdue. Obama's now the second President ever to trigger a ratings downgrade. Not bad.

[Jon Miller]

You realize that S&P's recommendations are for the Bush tax cuts to expire...

JM

[KrazyHorse]

Well it's rather important how your CB sucks.

(I agree that right now in the US it's probably positive or neutral.)

In the last 7 trading days 5yr inflation expectations have dropped by 30bps a year.

The Fed has completely lost its credibility when it comes to providing inflation at the target rate.

This is pathetic.

[Kuciwalker]

I thought inflation expectations were well-anchored? edit: where did the rolleyes smiley go?

[Ben Kenobi]

You realize that S&P's recommendations are for the Bush tax cuts to expire...

Along with roughly 4 trillion in cuts. They laughed at the Ried bill and rightly so.

[KrazyHorse]

Let's all marvel at the Fed's incompetence. How far below trend are we on CPI/expected future CPI now?

The Fed ALMOST got inflation expectations back up to their pre-recession average in April of this year, but since then they've let them slide 60bps

Awesome.

[MichaeltheGreat]

America's at 97 percent debt to GDP. This was long overdue. Obama's now the second President ever to trigger a ratings downgrade. Not bad.

No offense, Ben, but since budget bills originate out of the House, which is now Republican controlled (in theory, not a lot of discipline there), and the majority of our current fiscal FUBAR pre-dated Obama (in some cases, pre-dated Bush, the long-term solvency of Social Security and Medicare was first raised during the Reagan administration), how exactly does one lay S&P's publicity stunt at the feet of Obama?

[Berzerker]

lookie who it is... no more mexico?

[Tupac Shakur]

how exactly does one lay S&P's publicity stunt at the feet of Obama?

It's really pretty easy...

Defenders of Obama will attempt to pin the blame on his predecessor, President Bush, and on intransigent Tea Party radicals in the current Congress. But that would leave out the part in between. For his first two years in office, Obama’s party controlled both chambers of Congress – for part of that period, he had a filibuster proof majority in the Senate. During that time period, he and his fellow Democrats could have passed his supposedly ideal, long-term, deficit-reduction package -- one that represented a “balanced approach” between spending cuts and tax increases. It also could have delayed the deficit reduction for several years, so it wouldn’t have affected the current weak economy or the “investments” he considers crucial. Forget about actually accomplishing serious deficit reduction -- he didn’t even attempt it.

When Obama came into office, he argued that we needed deficit spending to boost the economy, so he passed a $800 billion stimulus package. Then, in one of his first supposed pivots to the deficit, he convened a ‘fiscal responsibility summit’ in February 2009. But that actually turned out to be part of a different pivot altogether. It was during that summit that then White House Budget Director Peter Orszag declared, “health care reform is entitlement reform.”

And so, for the next 13 months, Obama spent all of his energies trying to get health care legislation across the finish line. The end product was a plan that, according to both the Congressional Budget Office and actuary for the Centers for Medicare and Medicaid Services, did not bend the health care cost curve down. Let’s even set aside the argument over the accounting gimmicks that were employed to obtain a CBO score that showed modest deficit reduction. The reality is this: the law used money raised through tax hikes and Medicare cuts that otherwise would have been available for deficit reduction, to instead expand Medicaid by 18 million beneficiaries and create a massive new health care entitlement.

Of course, there’s more. After health care passed last March, Obama punted on the debt for the rest of the year as he awaited a report from his fiscal commission. He then ignored its recommendations and released a budget so ludicrous that within two months, it failed 0 to 97 in the Senate and he himself rejected it. He instead delivered a speech about his deficit reduction vision, which didn’t have enough details for the CBO to score. And then he spent the last few months arguing that he was prepared to offer Republicans a “grand bargain,” but to this day he hasn’t released details of this supposedly awesome deal that Republicans refused, beyond calculated leaks to favored reporters.

But there’s another reason why Obama won’t escape blame for this. Obama was elected president at a time when Americans felt the nation was in decline, and his central job was restore their faith that our best days were ahead of us, as President Reagan did after the Carter era. Whether you think he was dealt a poor hand or not, the bottom line is that the sense of decline has only deepened during the Obama presidency, and the first-ever downgrade of U.S. credit, whatever its ultimate financial implications, is yet another symbol of that decline.

Obama Won’t Escape Blame for Credit Downgrade

[DaShi]

The only one to blame this on is the S&P.

[Tupac Shakur]

The only one to blame this on is the S&P.

Why do people keep calling the rating agency "the" S&P? That was annoying the **** out of me when listening to all the TV talking heads today...

[DaShi]

I'll ask the Moody's.

[Tupac Shakur]

And no one gives a **** what the Fitch thinks.