Comments on: Why the S&P downgrade was delayed http://blogs.reuters.com/felix-salmon/2011/08/05/why-the-sp-downgrade-was-delayed/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: TFF http://blogs.reuters.com/felix-salmon/2011/08/05/why-the-sp-downgrade-was-delayed/comment-page-1/#comment-29378 Mon, 08 Aug 2011 12:07:53 +0000 http://blogs.reuters.com/felix-salmon/?p=9210#comment-29378 “The process now necessary is essentially unprecedented and every bureaucrat on the hill will be screaming bloody murder. Washington will NOT have a Merry Christmas.”

I waver between “wholehearted agreement” and “I’ll believe it when I see it”. Enjoy!

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By: TFF http://blogs.reuters.com/felix-salmon/2011/08/05/why-the-sp-downgrade-was-delayed/comment-page-1/#comment-29360 Mon, 08 Aug 2011 00:04:26 +0000 http://blogs.reuters.com/felix-salmon/?p=9210#comment-29360 Sheep, I am largely in agreement with you there, but I see the path a little differently.

I would begin by reverting the tax code to some approximation of what it was under Clinton. Those rates were modestly higher, but they didn’t stifle growth or innovation — and they definitely raised more revenue that is desperately needed for the transition you and I envision. Tax cuts should be the reward for getting the spending and debt under control, NOT the first step in the process.

Social Security can be reformed without seriously endangering anybody’s well-being. The deficit commission last year came up with some suggestions for that. I might collect less than presently promised, but I’d rather collect on a reduced promise than have a promised larger benefit that disintegrates into insolvency before I get a penny. (Right now I don’t count on receiving anything.)

Defense is expensive, and ten years of war would drive any budget into the red. All the more reason to keep the higher tax rates until we can dig out of this hole.

And yes, reconsidering our multitude of government agencies is a good place to start.

Perhaps the 2012 elections will bring us a Congress that takes fiscal sanity seriously? Unfortunately the current version is incapable of agreeing on anything that might reduce the deficit.

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By: TFF http://blogs.reuters.com/felix-salmon/2011/08/05/why-the-sp-downgrade-was-delayed/comment-page-1/#comment-29353 Sun, 07 Aug 2011 22:08:21 +0000 http://blogs.reuters.com/felix-salmon/?p=9210#comment-29353 “The government is spending way more than the very considerable income presently available.”

Present federal revenues (2010): $2.2 trillion
Social Security, Medicare, and Defense: $2.0 trillion

My apologies, but it is hard to take you seriously when you talk about balancing the budget WITHOUT reference to Social Security, Medicare, or Defense.

Either you are willing to slash those programs, you are willing to significantly raise taxes, or you are only pretending that you care about a balanced budget.

“That’s the path forward I see as necessary to restore the U.S. AAA rating over time.”

It is the path, but it cannot be achieved without sacrificing some of the sacred cows. Social Security, Medicare, Defense, or higher taxes. The numbers simply don’t add up otherwise.

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By: TFF http://blogs.reuters.com/felix-salmon/2011/08/05/why-the-sp-downgrade-was-delayed/comment-page-1/#comment-29351 Sun, 07 Aug 2011 19:51:42 +0000 http://blogs.reuters.com/felix-salmon/?p=9210#comment-29351 “Your argument that we need to increase taxes as a proportion of GDP”

I didn’t argue anything of the sort. I don’t care whether you increase taxes or slash spending, though I can see reasonable arguments for either (and suspect the American people will eventually support some combination). Unfortunately neither party stands for increasing taxes and neither party stands for real spending cuts.

Instead we have one party that stands for CUTTING taxes, while the other party stands for INCREASING spending. Do I really need to point out where that path leads?

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By: ForFact http://blogs.reuters.com/felix-salmon/2011/08/05/why-the-sp-downgrade-was-delayed/comment-page-1/#comment-29347 Sun, 07 Aug 2011 18:25:59 +0000 http://blogs.reuters.com/felix-salmon/?p=9210#comment-29347 Please allow me to post some facts here:
President Bush in his two terms (2000-2008) led to a debt increase of 6.11 trillion. He started with a debt/GDP ratio of 56.4% and ended with a debt/GDP ratio of 84.2%.
President Obama, in his 2 yrs and 7 months led to a debt increase of 1.65 trillion – but remember the situation he was in. So, why on the Earth, the Republicans BLAME the Democrats for the debt???? Since World war-II, all democrat presidents reduced the debt/GDP ratio and ONLY one republican president did that – Eisenhower. So, who made the right choices for the Country?
http://en.wikipedia.org/wiki/National_de bt_by_U.S._presidential_terms

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By: ForFact http://blogs.reuters.com/felix-salmon/2011/08/05/why-the-sp-downgrade-was-delayed/comment-page-1/#comment-29345 Sun, 07 Aug 2011 18:22:35 +0000 http://blogs.reuters.com/felix-salmon/?p=9210#comment-29345 Please allow me to post some facts here:
President Bush in his two terms (2004-2008) led to a debt increase of 6.11 trillion. He started with a debt/GDP ratio of 56.4% and ended with a debt/GDP ratio of 84.2%.
President Obama, in his 2 yrs and 7 months led to a debt increase of 1.65 trillion – but remember the situation he was in. So, why on the Earth, the Republicans BLAME the Democrats for the debt???? Since World war-II all democrat president reduced the debt/GDP ratio and ONY one republican president did that – Eisenhower.

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By: TFF http://blogs.reuters.com/felix-salmon/2011/08/05/why-the-sp-downgrade-was-delayed/comment-page-1/#comment-29331 Sun, 07 Aug 2011 12:05:38 +0000 http://blogs.reuters.com/felix-salmon/?p=9210#comment-29331 “It must separate the NEEDS of the nation from political WANTS.”

In this case, I’m afraid, the boundary gets fuzzy. Social Security and Medicare are at the root of the problem (especially when you look ahead 30 years), and the programs are already none too generous at the lower end. That doesn’t mean they shouldn’t be cut — but we need to balance the pain of cutting our social safety network against the pain of higher taxes.

I thought that many good proposals came out of the budget commission last year. Large spending cuts AND modest revenue increases, along with a framework along which the income tax system could be rationalized (with lower marginal taxes but fewer deductions).

Instead of voting on that, Congress passed a trillion-dollar spending increase and an extension of the unaffordable Bush tax cuts.

“Until this is done, to give Congress additional revenue would be like giving cocaine to a recovering addict.”

Tax revenues as a proportion of GDP have fallen, not risen, in recent years. Yet spending continues to increase. I hear this line repeatedly, but there is no evidence to support it.

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By: robb1 http://blogs.reuters.com/felix-salmon/2011/08/05/why-the-sp-downgrade-was-delayed/comment-page-1/#comment-29303 Sat, 06 Aug 2011 23:31:41 +0000 http://blogs.reuters.com/felix-salmon/?p=9210#comment-29303 Felix,
congratulations for your fairness, I would have pulled the article considering the downgrade indeed happened few min after the posting.

A downgrade can be soon enough converted into an “upgrade” if a solid will to repay debts is recognized. But is it there now?

Considering that most of our bonds r in the hands of China & Co… perhaps this is just a message for them that the US is getting now poor, wants a discount and lost steam as the world only economic pulling locomotive.

WWII was over more than 60 years ago, is time we quit financing the expansion of all other countries and start thinking more domestically about our well being. Will all those countries be so generous as we had been, now that we need help?

For sure we will pay an immediate steep price: more inflation due to skyrocketing cost of imported goods and commodities. Subsequent economy contraction and consequent worldwide recession r most likely.

Will the politicians have the courage to start supporting domestic manufacturing now? And curb offshore outsourcing and investing?

Wall Street alone and refi our home will probably not pay for food anymore.

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By: Dollared http://blogs.reuters.com/felix-salmon/2011/08/05/why-the-sp-downgrade-was-delayed/comment-page-1/#comment-29302 Sat, 06 Aug 2011 23:00:04 +0000 http://blogs.reuters.com/felix-salmon/?p=9210#comment-29302 What Kaleberg said. The money will still be chasing safety. Although the media’s failure to cover the Republican’s fault in this one is troubling, because it promises more trouble ahead.

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By: JCnTN http://blogs.reuters.com/felix-salmon/2011/08/05/why-the-sp-downgrade-was-delayed/comment-page-1/#comment-29300 Sat, 06 Aug 2011 22:52:04 +0000 http://blogs.reuters.com/felix-salmon/?p=9210#comment-29300 So what ARE the consequences? I’ve been suggesting that this has been a coordinated effort to return to “higher interest rates” and subsequently “inflation” all along. But to force the issue would be political suicide.

I thought they might actually allow a technical “default” and let the market up the interest rates. Instead, they just simply acted as they normally do and got the downgrade anyway. Now interest rates will rise and no political party’s proposal is to blame. How convenient!

Unfortunately, one name IS attached to this time period in American history. Regardless of his role in the events creating the situation, he will carry the public’s perception of responsibility. Like Mr. Carter, I don’t see a second term for Mr. O. (By the way, in 2008, I was hoping he’d wait until 2012 for his first run and this scenario is EXACTLY why. No matter who held the job post-meltdown, the inevitable pain would be blamed on the resident President.)

Are we really afraid of Stagflation or is it just a great fear-inducing headline? Growth: How many expansion projects or non-essential goods are moving now? How much household or even corporate spending is simply replacing the basic necessities? Inflation: In measured doses, it works well for dealing with outstanding Govt. debt; devalue the currency supporting it. GDP can go up with inflation; static debentures will not.

Now about that jobs problem???
How’s that “free trade” thing working out for ya?
Now that China and India have grown their respective infrastructures and have the capacities to assume global consumption, can we please go back and re-level the playing field? Tariff – an old school solution for your new economy pains. It’s already started but I’d like to see a little more gusto.

But I could be wrong.

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