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Calling the Kettle Black
Who is to blame for U.S. credit downgrade? RINO editor-at-large of Fortune
failed to look in the mirror when he called conservatives "American Idiots"



Rand Green 
Yosemite Valley
 

 

"THIS WHOLE FIASCO just enrages me, as it ought to enrage anyone," wrote Allan Sloan, senior editor-at-large for Fortune magazine, in a cover story for the publication's Sept. 5, 2011, issue. The fiasco to which he referred was the recent negotiation between Congress and the president over raising the debt ceiling.

Cover of Fortune Magazine Sept. 5, 2011
IF YOU ARE A FISCAL CONSERVATIVE, THIS MEANS YOU! Fortune magazine has just called you hate-filled knuckle-headed idiot from the hinterlands!

It enrages me, too, but for very different reasons than what Sloan is complaining about. The cover blurb for his article had "AMERICAN IDIOTS" in bold black type, with the subhead, "How Washington Is Destroying the Economy and What We Can Do to Fix It." The artwork on the cover showed an American flag with the stripes as red-and-white arrows pointing downward, symbolizing America's decline. I asked myself, "Could Fortune possibly have actually gotten this one right?" But no, as I quickly discovered, Sloan was pointing his finger at the wrong culprits, which only intensifies my rage or perhaps more accurately put, deepens my disgust.

"Today's crisis was completely avoidable," wrote Sloan. And that is an accurate statement. But from there on, he has it 180 degrees out of kilter. Wrote he: "You can blame it directly on the fools who brought our country to the brink of defaulting on its debts in the name of saving us from … I'm not sure what. Yes, the Tea Party types bear primary responsibility -- but they couldn't have done it without the cowardice and incompetence of the Obama administration, which let things get way out of hand."

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Before analyzing the multiple fallacies in that statement, let me quote Sloan further. "A few facts," he wrote. (But what followed was anything but factual.) "The S&P downgrade [of the U.S. Government's credit worthiness] is not as some hate-filled knuckleheads inside the Beltway and in the hinterlands keep repeating from fear that the U.S. is 'broke' or lacks the financial ability to meet its obligations. S&P's primary worry is that the U.S. may not summon up the political will to pay its debts."

The perfidy of that set of assertions and aspersions is unconscionable. In plain English, it's a libelous pack of lies.

Note, first, the typical East Coast Liberal Elite distain for those from America's heartland, in the expression "hate-filled knuckleheads … from the hinterlands." Note also how Sloan dismisses fiscal conservatives as "Tea Party types" and "fools." But whatever pejoratives he may choose to use for conservative Americans and their elected representatives, none of them has ever suggested, to the best of my knowledge, that America is financially unable or unwilling to pay its obligations, and Sloan ought not make such accusations without backing them up. What fiscal conservatives have said is that if things keep going the same direction they have been, we will inevitably, and probably very soon, reach the point that we are unable to pay our bills, just as would be true with any corporation or any family spending itself into financial oblivion. We are not yet at that extremity, but even now, our government is so heavily in debt that even with responsible fiscal policy, it could take generations to dig out. Reaching that point avoiding national bankruptcy is exactly what the fiscal conservatives in Congress were trying to "save us from," an obvious fact that anyone but an idiot (or someone blinded by a radical agenda) can see but that apparently has eluded Sloan and his ilk in the liberal media.

Obama, by the way, got almost everything the radical left wanted in the debt deal. He made only a few trivial concessions to House Republicans.

A Big Government Republican, a.k.a. R.I.N.O. (Republican in Name Only), Sloan graduated from the liberal Columbia University School of Journalism and has been a business reporter for Newsweek and a string of other liberal publications prior to joining the staff of Fortune. He has prided himself in being what he describes as a "moderate."

But Sloan's criticism of Obama as cowardly and incompetent for giving up even that little shows just how far to the left Sloan really is. Obama has moved the country farther to the left than any president in our history, but he's not tough enough in asserting the Progressive agenda to satisfy Sloan. 

In his article in Fortune, Sloan directs the reader to the Standard & Poors website where, as he says, they may "read the analysis for [themselves]" as to why S&P downgraded the U.S. government's credit rating. He was quite confident, of course, that most readers of Fortune would have neither the time nor the inclination to do so, and that most would assume that he must be telling the truth or he wouldn't provide documentation.

But I took the time it being my business to do so and discovered that what the S&P analysts actually say is diametrically opposed to what Sloan asserts in his article.

If Sloan actually looked at and listened to S&P's rational for the U.S. credit downgrade and then came away with the conclusion that it was the conservative Republicans in the House who were at fault, either he is the idiot, rather than those he accuses of being so, or he is intellectually dishonest or both.

I listened to (and did a partial transcription of) a video on the S&P website of an Aug. 7 interview on S&P Matters TV with David Beers, global head of sovereign ratings for S&P, and John Chambers, chairman of the Sovereign Ratings Committee. (Link: http://video.standardandpoors.com/?video=mXYnxHS2HZ2htRDHKhksjWs8mD#) These are the men who made the decision, based on long-established criteria the same as they would apply for any sovereign government to lower the U.S. credit rating to AA+, down from its previous AAA, and tack on a negative outlook meaning there's a pretty fair chance, based on their analysis, that the rating will be further downgraded over the next 6 to 18 months. In the interview, Mr. Beers and Mr. Chambers explain clearly the reasons for the Aug. 5 credit downgrade.

And it's not because those "idiot" "Tea Party types" in Congress insisted on getting some concessions on spending reductions and a commitment to bring a balanced budget amendment to the floor before agreeing to raising the debt limit. Quite the opposite.

"We looked at the agreement very carefully," said A&P's Mr. Beers. "And we concluded two things. One was in reflecting on the whole debate this year, we concluded that the process itself was likely to continue to create uncertainty about the resolve of the U.S. government to take decisive action on fiscal issues, and that was highlighted by this difficulty of reaching a consensus…. And the other was simply our analysis of the agreement itself on the debt consolidation program, because we think it falls short in both its size and its scope of what would be needed to stabilize the debt over the medium term."

There is, first of all, no suggestion in anything Mr. Beers said to indicate that S&P is worried, as Sloan asserts, "that the U.S. may not summon up the political will to pay its debts"; rather, the concern is that the U.S. may not be willing to reach a consensus on a workable debt consolidation plan that will prevent us from getting so deeply in hock that we are no longer capable of paying our national debt. The difference is stark.

Mr. Beers explained that the inclusion in the debt limit agreement of $970 billion in spending cuts over 10 years, with an additional $1.5 trillion to be recommended by a new congressional committee (defaulting to $1.2 trillion if the committee gridlocks) is a step in the right direction but insufficiently "robust."

"We looked very carefully at that program, and we concluded based upon our analysis that while it will make a dent in the rising debt burden, it won't be enough to prevent the debt trajectory, well, the debt, to continue to rise over the medium term," he said.

In other words, it was not the conservatives' insistence upon making cuts in federal spending that caused the downgrade but the fact that those cuts were woefully insufficient.

Just how insufficient? Mr. Beers spells that out as well.

S&P projects that "the net public debt for U.S. governments … including federal, state and local governments … will amount to approximately 74 percent of GDP" this year, he said. How much will the proposed spending cuts help that? "With the new agreement taken into account, we think that the debt burden will continue to rise as a percentage of GDP to about 79 percent of GDP by 2014 and to roughly 86 percent by 2021. So even taking this agreement into account, you can see that the debt burden is still rising."

So if those Congressional conservatives with constituents in the "hinterlands" had not held out for at least a trillion dollars in spending cuts with another 1.5 trillion on the come, amounts that are dwarfed by the additional borrowing authorization the administration got out of the deal, U.S. government debt as a percentage of GDP would have been all the higher and the U.S. government's credit rating would have been worse, not better. Those cuts helped a bit. But what Mr. Sloan was saying is that the cuts need to be much deeper to put the U.S. government on a sound financial footing and stabilize its credit rating.

"The other dimension … to this decision," Mr. Beers said, "is our observations about the political process, the great difficulty of the Congress and the administration finding some common ground, a sliver of common ground, that led to this agreement," through a "very long, exhausting process." That, he continued, "makes us very pessimistic about the capacity" of Congress and the administration, in coming debates on the issue, "to be able to build on this agreement any time soon."

Nothing will change that except putting people in office in both houses Congress and the Presidency who will reach a consensus on sound fiscal policy, and that means constraint, not profligacy.

Regaining a AAA rating, in the best case scenario, could take many years, said S&P's Mr. Chambers in the interview. It has taken other countries in similar situations anywhere from eight to 18 years to rebuild their credit when they have implemented and stuck with sound fiscal policies. But stabilizing the current rating, as opposed to facing further downgrades, can be achieved much more quickly with a consensus on some sound changes in fiscal policy demonstrating a commitment to begin reducing U.S. sovereign debt as a percentage of GDP.

One positive indicator, according to Mr. Chambers, would be the implementation of the Budget Control Act of 2011 "as designed," which includes an agreement to pursue a balanced budget amendment. He said he expects that it will be "implemented as designed," but added that "it would be negative if it weren't."

In other words, not only the spending cuts the conservatives in Congress pushed for but their insistence on a balanced budget amendment have prevented the credit downgrade from being worse than it is, and both the agreed cuts and the balanced budget amendment must be implemented to help stabilize the debt situation. It is those who insist on increasing government spending and increasing the amount of money the government borrows who are responsible for the credit downgrade and who put the government's credit standing at continued risk.

"For the United States [to stabilize its credit rating]," said Mr. Chambers, "the crux of the matter will be improving its fiscal position and getting greater ability to reach consensus across the political divide."

It should be crystal clear to anyone with [if you will pardon a "hinterland' expression] a lick of sense that the consensus that is needed is not an agreement to continue the insane and obscene spending and borrowing policies that have brought us to this point but an agreement to bring restrained and sanity to government spending.

In other words, spend less. In other words, live within our means. In other words, reduce the size of government. Can I say it any more simply? Everyone in the "hinterlands" of this great country understands that, and that tells me they are all a lot smarter than the Ivy League-educated liberal elites who currently run the government and dominate our educational institutions and the major media, and who seem incapable of grasping that simple principle. These hinterlanders, the ordinary freedom-loving, hard-working, patriotic Americans who build this country and made it prosperous, are also a lot smarter than the editor-at-large of Fortune magazine who is so outraged at conservative Republicans insisting on financial restraint.

So put out is Sloan with fiscal conservatives that he announced in the article in Fortune that he is leaving the Republican party.

The wolf has shed his sheep skin, and I shed not a tear.

One other point I would like to make. Rep. Tom McClintock, one of the rock-solid conservatives in Congress who has been a rock-solid conservative since long before the Tea Party emerged, explained [see link] on Aug. 2, the date the Budget Control Act of 2011 was passed, that in actuality, the act "will decrease total federal spending by just ... one tenth of one percent a breathtakingly underwhelming achievement after a 28 percent increase over the last three years." I think those numbers put the whole issue in perspective better than just about anything I can think of.

Just think about that for a moment. Spendthrift Democrats (with help from a handful of RINOs) have increased spending in three years by 280 times what this debt limit agreement will actually reduce it by, but the House Republicans who forced a paltry spending reduction of 1/280th of that amount are blamed for ruining the national economy.

Seriously, folks, our country was getting along very well, thank you, just three years ago without that 28 percent increase in federal spending. There is no justifiable reason we can't reduce spending immediately at least by close to that amount, and put all those newly hired government employees, who are not creating wealth, back into jobs in the private sector. Oh, don't worry. The jobs will be there -- if government will get out of the way of America's entrepreneurs and let us utilize our own resources and compete fairly in the global economy.

Here's the bottom line: Our job as voters and concerned citizens in this country is to assure that at the next election we put people in office in both houses of Congress and in the White House who can reach a consensus on a sound fiscal policy for our nation. I get fed up with radical leftist progressive socialists, whose sole agenda is to extend government control at any cost, calling for "compromise" when all they mean is "do it our way," and then blaming those on the other side for standing their ground. They are pots calling the kettle black.

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