Although we probably should have started this conversation months ago, it's better late than never. Robert Reich draws attention to the fact that the "$4 trillion in savings" figure we've been hearing Republicans insist upon day after day is a target specifically set by S&P, an unelected private firm.
"It's warned it might lower the nation's credit rating even if Democrats and Republicans make a deal to raise the debt ceiling. Standard & Poor's insists any deal must also contain a credible, bipartisan plan to reduce the nation's long-term budget deficit by $4 trillion -- something neither Harry Reid's nor John Boehner's plans do.
If Standard & Poor's downgrades America's debt, the other two big credit-raters are likely to follow. The result: You'll be paying higher interest on your variable-rate mortgage, your auto loan, your credit card loans, and every other penny you borrow. And many of the securities you own that you consider especially safe - Treasury bills and other highly-rated bonds - will be worth less.
In other words, Standard & Poor's is threatening that if the ten-year budget deficit isn't cut by $4 trillion in a credible and bipartisan way, you'll pay more -- even if the debt ceiling is lifted next week."
To call this anything other than extortion is flatly disingenuous. As the tyranny and brinkmanship of the minority continues to prevent a return to anything resembling a sane tax code, the only way to achieve handing over the full ransom (which this is) requires acceptance of the philosophy that nearly every American social advance of the 20th Century was a botch and must be dumped. Standard & Poor's, a corporation utterly complicit in the inaccurate rating of derivatives which led to the 2008 meltdown and unanswerable to the citizenry of the U.S., is now the primary driver of a movement to fundamentally alter our government's most basic relationships with its people. How did we get here? Zachary Karabell shines some light on that:
"How did it come to this—that a trio of private-sector companies could wield such enormous influence? More specifically, a trio that has proven chronically behind the curve, analytically compromised, and complicit in the financial crisis of 2008–09 as well as the more recent euro-zone debt dilemmas? Somehow, these inept groups again find themselves destabilizing the global system in the name of preserving it.
While there are more than 100 credit-rating agencies worldwide, three—Moody’s, Fitch, and Standard & Poor’s—occupy their own particular universe, the products of a New Deal ruling from the SEC that enshrined "nationally recognized statistical rating organizations” to ensure that the bonds held by insurance companies, banks, and broker-dealers were appropriate for their capital requirements.
From this well-intended decision, three new private-sector firms attained the status of government regulators but with none of the oversight. Undoubtedly there are many honorable, meticulous, and intelligent people working for these companies. But throughout the last decades of the 20th century and into the 21st, the decisions of the agencies about the creditworthiness of emerging-market countries imperiled financing needs, and we have seen a repeat of the crises of the European periphery, as the best plans to restructure the debts of Ireland, Portugal, and Greece have been jeopardized by the rigid application of formulas that the ratings agencies apply.
These agencies also evaluate private debt. And it was their continual stamp of approval on trillions of dollars of ultimately worthless mortgage-backed securities that allowed pension funds, endowments, and municipalities to buy them up in the erroneous belief that they were safe and sound. That decision cost taxpayers hundreds of billions of dollars."
While there are more than 100 credit-rating agencies worldwide, three—Moody’s, Fitch, and Standard & Poor’s—occupy their own particular universe, the products of a New Deal ruling from the SEC that enshrined "nationally recognized statistical rating organizations” to ensure that the bonds held by insurance companies, banks, and broker-dealers were appropriate for their capital requirements.
From this well-intended decision, three new private-sector firms attained the status of government regulators but with none of the oversight. Undoubtedly there are many honorable, meticulous, and intelligent people working for these companies. But throughout the last decades of the 20th century and into the 21st, the decisions of the agencies about the creditworthiness of emerging-market countries imperiled financing needs, and we have seen a repeat of the crises of the European periphery, as the best plans to restructure the debts of Ireland, Portugal, and Greece have been jeopardized by the rigid application of formulas that the ratings agencies apply.
These agencies also evaluate private debt. And it was their continual stamp of approval on trillions of dollars of ultimately worthless mortgage-backed securities that allowed pension funds, endowments, and municipalities to buy them up in the erroneous belief that they were safe and sound. That decision cost taxpayers hundreds of billions of dollars."
A majority of Americans wanted the Bush Tax cuts to expire before they were renewed last year. With the Republicans holding extended unemployment benefits hostage following the disastrously low turnout of 2008 Obama supporters in the most recent election, the President had no choice but to go along (or to cave if you want to ignore the reality of the position he was in). Including the planned expiration of the W cuts alone in any of the current proposals would achieve the $4 trillion S&P demands. However, every major policy proposal being offered by the house runs provably counter to the will of the people.
In the most recent CNN poll asking specific policy questions regarding the "crisis:"
73% support increasing the taxes paid by people who make more than 250 thousand dollars a year, reiterating their position from last year. The Republicans won't even consider it.76% support increasing the taxes paid by businesses that own private jets. Republicans like to call this class warfare.
73% support increasing the taxes paid by oil and gas companies by ending federal subsidies for those businesses. This is, of course, is also not an option according to Republicans.
68% oppose cutting pensions and benefits for retired government workers. These are the same workers one Republicans characterized not having a "real job."
84% oppose cutting the amount spent on Social Security
87% oppose cutting the amount spent on Medicare
77% oppose cutting the amount spent on Medicaid
It's abundantly clear what the people want. Too bad. It's not what Republicans want. More importantly, it's apparently not what S&P wants. And it's somehow become their call.
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