Rachel Maddow Debunks GOP Talking Point That S&P Downgrade Was Due To Debt

Aug 07 2011 Published by under Uncategorized

On Meet the Press today, Rachel Maddow debunked the GOP talking point that the S&P downgrade was due to debt not politics.

Here is the video from NBC News:

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David Gregory: This is a wider discussion. Rachel Maddow, it does get back to political dysfunction because if Americans are wondering where are the jobs, the bigger question is where is the economic growth. Like my kids, I like cartoons. This is one I saw in The Hill. The easy part, it shows where the parties jumping over the debt ceiling. If anybody thought that was easy, the harder part is the job growth. Austin Goolsbee projected growth that was wildly off the mark this year.

Rachel Maddow: We didn’t know how bad the recession was. We know the hole we have been digging out of is deeper than we thought. The question is whether or not the stock market dropping 500 points in a day and as much as it did in two weeks, the downgrade is going to be a wake-up call. What is feasible in Washington? The downgrade message, whatever you think of S&P, they mentioned the need for increased revenues and revenues being on the table three separate times. They indicted the Republican Party right now in Washington. It’s a question about whether or not there will be a change in fashion and whether or not it will be a wake-up call that the parties need to work together rather than the Republicans fashion right now, which is any deal is a bad deal.

Alex Castellanos: Where to begin? I don’t think the Republicans think any deal is a bad deal. When you look at the ratings, these Republicans in Congress are saying how can you grow an economy when you have to service this growing debt? They put their foot down on that. The problem is not Republican intransigence, the problem is balance, as the president likes to call it. We have balance. We have Republican intransigence, and we have Democratic intransigence. That’s why we got nothing done.

Rachel Maddow: That’s not why S&P says they downgraded us though. S&P said the downgrade was motivated by the debate of raising the debt ceiling. That’s why they say they downgraded us, not because there’s too much debt but rather Washington is not working. We did something insane with getting that close to defaulting on purpose.

The man behind the downgrade, John Chambers of S&P was on CNN’s Anderson Cooper 360 and he agreed with Maddow:

Cooper: Why did S&P downgrade the United States’ credit rating today?

Chambers: Well, I think there were two reasons. The first reason is the one that you have outlined, being our view of the political settings in the United States have been altered. We have taken them down a notch, the rating down a notch. The political brinkmanship we saw over raising the debt ceiling was something that was really beyond our expectations, the U.S. government getting to the last day before they had cash management problems.

There are very few governments that separate the budget process from the debt authorization process. And we also think more broadly that this debate has shown that although we do have an agreement that will and we do believe will deliver at least $2.1 trillion of savings over the next decade, it is going to be difficult to get beyond that at least in the near term. And you do need to get beyond that to get to a point where the debt-to-GDP ratio is going to stabilize.

COOPER: So it’s interesting. You’re saying without a doubt, the recent debate, the recent roadblocks in Congress, the tenor, the timing, the tone of the debate had a major impact on this.


I think that’s what put things over the brink. In addition, we have a medium-term fiscal forecast that we see, you know, the debt-to- GDP ratio continuing to rise over the forecast horizon, and putting it in a position where it would no longer be compatible with many other AAA ratings.

As Maddow correctly pointed out, S&P downgraded the US because of the strategy that the Republican Party used of creating a debt ceiling crisis and demanding that budget cuts be tied to a debt ceiling increase. Chambers didn’t blame one party on his CNN appearance, but his writings and his stated reasoning leave little to question as to who and what he is talking about. It wasn’t just the strategy. It was also the reality that Republicans have made our political system is so dysfunctional that it is virtually a guarantee there will be no more agreed upon cuts beyond what is in this deal.

That is not to say that the left is blameless. Democrats, progressives, and activists all bought into the idea that a debt deal had to be a part of raising the debt ceiling. As S&P has pointed out, it didn’t. Buying into the Republicans ludicrous premise that these two things had to be done together enabled this crisis. Democrats and progressives should have stood up and said, we are not going to tie raising the debt ceiling to a debt deal. Raise the debt ceiling, and then we can discuss debt.

The left made a fatal strategic mistake by allowing Republicans to set the requirements for a debt ceiling increase. No, this is not just Obama’s fault. Every person on the left, who claims Obama caved on the deal is also to blame because they bought into the Republican construct that there had to be a deal in the first place. Democrats in Congress and the activists were both too busy buying into the horse race over the deal itself to stop and ask why we are discussing a deal in the first place.

Rachel Maddow knocked down the GOP talking point that their strategy of manufacturing a crisis had nothing to do with the downgrade. Republicans are still contending S&P downgraded US debt because we didn’t cut enough. People like Maddow need to continue going on national television every day and pointing out that Republicans made this crisis, and they caused the downgrade.

In a hostage situation, at some point it may become necessary to take action to free the captives.
Since the Democratic Party can’t free us, it is up to voters to go to the polls in 2012 and take out the hostage takers.

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