The Republicans, led by the Tea Party, have finally succeeded in another step in their quest to wreck the US economy, oddly believing that it will help them win the 2012 election. Their slash and burn, no-revenue dogma that won out in the manufactured debt crisis that came to a head last Monday failed at the one goal it should have set for themselves; that is, to calm the markets and provide assurance of the strength of the US economy. Their 24/7 assault on the economy and job recovery, all in the name of taking down the President, only succeeded in inflicting the damage that business leaders, banks, and the Treasury begged them not to do.
We are now reaping what the Republican Congress has sown. Not only are the markets jittery after the plunge of worldwide markets yesterday, we were just rewarded with a nice weekend starter:
Bloomberg is also reporting that S&P changed its assumption that the 2001 and 2003 tax cuts would expire by the end of 2012, "because the majority of Republicans in Congress continue to resist any measure that would raise revenues."
"The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics."
"More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011."
"Since then, we have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us pessimistic about the capacity of Congress and the Administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government's debt dynamics any time soon."
The White House has already challenged the downgrade, and even the math leading to it. Moody's and Fitch, the other ratings agencies have stood their ground on maintaining their ratings, at least for now. However, no one can argue with S&P's premise that the gridlock created by intransigence on the part of the Tea Party contributed to this downgrade. Also, their negative outlook on our ability to end that gridlock can also be well understood if the last several months are any indication. Clearly, the brinksmanship played by the Tea Party on our debt simply doesn't work. Don't look for it to change any time soon, though.
Watch this weekend for the GOP, led by the Tea Party, to blame the President and the Dems for this downgrade, completely ignoring the gridlock created by them in all manner of policy and law making.