August 05, 2011


Voting to give yourself more credit does not solve your spending problem. Any kid knows this, but Congress and the President thought they played by other rules.

They were wrong.

As a result, Standard and Poor's has downgraded the U.S. economy (PDF), marking this moment as the first time our nation's credit has ever been downgraded.

Further, S&P indicated that conditions for a further downgrade were possible in 12-18 months.

If you aren't sure what that means, let me translate it into more practical terms, when I compare it to the economic equivalent of an ELE.

If Obama really did intend to Cloward-Piven the United States intentionally, he has done so masterfully. We've just become the Nicolas Cage of world economies.

Great job, "elites."

You got the hope and change you were looking for.

Posted by Confederate Yankee at August 5, 2011 09:18 PM

Yeah nice spin. S&P downgraded the USA because your team refuses to bring tax rates back to where they were from 1950-2000. Did you even bother to read what S&P said before you wrote this? Here, let me help:

"Compared with previous projections, our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act."

Posted by: Jim at August 6, 2011 10:32 AM

Sure, Jim. Spending is obviously irrelevant.

The titanic didn't have a problem with the hole in the side. The bilge pumps just weren't big enough.

Posted by: Phelps at August 6, 2011 10:51 AM

You have to remember that Jim belongs to a group that feels entitled to spend not just other people's money, but the money of their children, grandchildren, and great-grandchildren, in the sincere and misguided belief that government knows what is best for you in each and every aspect of your life.

He can't see that the massive hikes in spending under the recent Democrat-controlled are a problem. He actually thinks more spending is the answer to the problem, much in the same way alcoholics think the answer to all their problems can be found if they can only scrounge up enough money for another bottle or three.

He can't grasp that raising taxes, which drains the coffers of individuals and businesses alike, is bad for the economy because it decreases cash flow and disposable income for everyone except the government.

Phelps, Jim's view of the world is completely alien to the view we and the Founders shared of a limited government, where citizens are sovereign.

He believes that what we need is more government, more rules, more conformity, and more control... if he can just get government big enough to seize all he demands.

Posted by: Confederate Yankee at August 6, 2011 11:53 AM

Don't tell me guys, tell S&P.

Which is more likely, that Wall Street has been overrun with misguided liberals who don't understand how the taxes effect the economy, or that you yourselves are wrong?

Posted by: Jim at August 6, 2011 12:37 PM

Get back to us when you can tell us why YOUR PARTY REFUSED to submit a budget for over two and a half years(and still counting). And maybe at the same time you can tell us why your party's president has spent the country deeper into debt in his first two years then the total spending of all the other presidents in the history of the country.

Posted by: emdfgl at August 6, 2011 03:33 PM

Don't need to tell S&P, Jim. They certainly understand. as would you, if you'd actually read what they said when they downgraded us. They did not call for higher taxes. In fact, they explicitly took no position on that. From the document:

"Standard & Poor's takes no position on the mix of spending and revenue measures that Congress and the Administration might conclude is appropriate for putting the U.S.'s finances on a sustainable footing."

Takes no position. Slightly different from what you said, and you conveniently didn't link to what they said to avoid having people read for themselves. S&P would have been equally happy with a package consisting solely of cuts, as long as it had been big enough, but the President would have none of that.

This downgrade was inevitable, because the size of government Obama and the other socialists Congress want simply can't be paid for at our current level of taxation. So Obama only offered two alternatives. One, to get the Republicans to raise taxes (hey, it worked with Bush Senior), which would have demoralized half the country and ensured an Obama reelection and a Democratic resurgence, while locking in the much larger government, or two, to attempt to make sure that he could blame the Republicans when the inevitable happened. This was all about his reelection, he doesn't give a damn about the country's economic health. Why should he? He's rich, set for life. And he understands that people who are on the government dole tend to vote Democratic, so he wants as many people to be poor as possible.

Posted by: Skip at August 6, 2011 03:41 PM

Just a quick point, Gentle Readers: Let us not forget that for the last two years of the George W. Bush administration, Democrats controlled the Congress, hence, the nation's pocketbook. Mr. Bush (and a good number of irresponsible Republicans) did indeed engage in some unwise spending schemes which surely delighted Dems, but when Mr. Obama and others trot out the "Bush did it too" argument, keep in mind that the Dems have been primarily or entirely responsible for our nation's spending since 2006.

Posted by: Mike Mc at August 6, 2011 04:16 PM

Skip as you quote, S&P calls for a mix, cuts to entitlements and higher taxes.
I agree they don't care how that mix is achieved, the numerical result will be the same, but they clearly frame the issue as one of either gutting entitlements -- social security and medicare -- or repealing the Bush rates for the top bracket.

Either death panels for seniors -- stop getting old and sick already OR simply returning to the tax rates we had before the Bush cuts. Like the rates we had in the Eisenhower, Nixon, Reagan, or Bush I years. Socialists all no doubt.

CY in Nov 09 you were very outspoken about any rationing of health care saying lower spending would cause the death and suffering of Americans.
How were you going to pay to prevent that suffering without raising the money to pay for that health care?

It's pathetic to see how you guys have become brainwashed into thinking that Reagan era tax rates are socialist. Seriously, wtf?

Posted by: Jim at August 6, 2011 04:34 PM
It's pathetic to see how you guys have become brainwashed into thinking that Reagan era tax rates are socialist. Seriously, wtf?

Straw man. No one here has argued that higher taxes would be "socialist". What we have argued is that they are pointless. When spending keeps increasing at this rate, there is no tax rate that will keep up with it. None. The Laffer Curve will catch us far before then.

Even Obama has gone on the record saying several times that it is a terrible idea to raise taxes in a bad economy. He really hasn't come up with any reason to do so now except "fairness".

Look at federal revenue as a percentage of GDP:

That's the real tax rate. That's where the Laffer Curve really lies. The marginal rates have varied widely in that time with very little influence on how much money the federal government has actually managed to bring in. It's 25-35% of the GDP, regardless of the rate. Thinking that we can spend 34%+ of the GDP (the current rate) or even push it higher as the president has proposed flies flatly in the face of a historical revenue rate of around 30%.

It just can't. Be. Done. People stop making the money to pay into the system, either by choice or by a hobbled economy.

Posted by: Phelps at August 6, 2011 10:38 PM

Jim, you are such a sad puppy. You really need to look for a different koolaid. The arguments by CY and my fellow capitalists have clearly demonstrated how wrong you are, but you are way to pig headed to see the truth, Let me provide you a direct quote from one of the great men of the 20th century.

"It is a paradoxical truth that tax rates are too high and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now...Cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus."
-John F Kennedy, Nov 20, 1962, president's news conference

I know it is tough to believe this, but try this on for size: "Lower rates of taxation will stinulate economic activity and so raise the levels of personal and corporate income to yield within a few years an increased-not a reduced-flow of revenues to the federal government."

-John F Kennedy, Jan. 17, 1963, annual budget message to the Congress, fiscal year 1964.

Sadly Jim, he did not get to see the fruits of his efforts. So Jim the question begs: If John F Kennedy could figure it out, why can't you?


Posted by: mixitup at August 7, 2011 10:25 AM

The SandP clearly say the the US has to cut 4 trillion in spending or suffer further downgrade. I don't see where they advocate increasing taxes as well. Perhaps we should have the other 51% of the US pay taxes to make everything fair and bring in more revenue.

But then consider that any tax increase in a depression will worsen the economy. That is what FDR did and it resulted in an additional 20 years of pain.

Go take eco 101, you will learn something and not have to pick up this stuff off the web.

It is clear the Obama is trying to destroy the US. Obamacare is the worst thing that could have happened and will rob us of any wealth we can keep after this bum is out of office. And note this, the elderly clearly know who the bad guy is in the room and intend of taking care of him in 2012.

Posted by: david7134 at August 7, 2011 07:44 PM

Jim will not grasp the simple fact that spending is beyond what even radically increased taxation can cover.

S&P officials said today that we will be downgraded again if we do not cut out DEBT... not increase our spending. They can tax the "rich" at 100% and it won't solve the problem.

The Left Behinds simply refuse to deal with that reality.

Posted by: Confederate Yankee at August 7, 2011 09:32 PM