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Author Topic: Joseph Stiglitz: “Romney’s plan is based on magic”  (Read 433 times)
Straw Man
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« on: November 02, 2012, 10:52:11 AM »

This guy is no fan of Obama but he has the clarity to know that true dangers of Romney


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Joseph Stiglitz has a decent résumé. He won the Nobel Prize in economics and served as chairman of Bill Clinton’s Council of Economic Advisers before being named chief economist of the World Bank. His C.V. , however, pales before his passionate commitment to pushing for economic policies that help the poor and powerless — inside and out of the United States. For Stiglitz, economics and social justice can’t be separated.

Since the election of Barack Obama, Stiglitz has also been something of a thorn in the side of the current administration, consistently critiquing the White House for falling short. He wasted no time in pointing out that Obama’s stimulus was too weak and his housing policy woefully ineffective — and he’s been particularly biting on the topic of Obama’s subservience to banking interests. But with Election Day fast approaching, it’s always useful to look at what the other guys would do, instead. Stiglitz took some time out to explain to Salon why, when the topic is economy, there’s really no choice for progressives in this election.

What’s at stake in this election for the U.S. economy?

Quite a lot. First, there’s what we call the macro-economy. The budget cuts that Romney/Ryan propose will certainly slow growth. If the European downturn continues that could tip us into a recession. The cuts certainly won’t provide the kind of stimulus that Obama’s jobs bill, for instance, pushes. Romney’s plan is based on magic: Just because he gets elected, the economy is supposed to take off. There is no evidence that anything like that would happen. Quite the contrary — I think the opposite would happen. The business community would see the cutbacks coming and that would itself cause a slowdown in the economy.

So that’s the macroeconomy. Secondly, the Romney/Ryan budget promises to spend more on the military while cutting taxes and cutting the deficit, and that means only one thing. If you look at the arithmetic, it means less investment in infrastructure, R&D, education … it just can’t add up any other way. And that means we’ll be growing more slowly in the future.

The irony is that these two things — lower growth now and lower growth in the future — means that our debt-to-GDP ratio won’t improve, it will get worse. So even if you were foolish enough to think that the debt-to-GDP ratio is the main determinant of future prosperity — which it’s not — the Romney agenda will fail.

And although I don’t like what’s called “presidential economics,” where you look solely at what happens under a particular presidential regime, the fact is that Romney has many of the same economic advisers that Bush did. Those economic advisers essentially doubled the debt in eight years. And that was in a period of relatively high growth. Why would we think that wouldn’t happen again? I don’t see any reason for that. Particularly when the global environment is more adverse.

And then the third part has to do with what kind of society we will be. If Romney wins, we will become a more divided society, a more unfair society. And that in turn will bring greater inequality, and will also undermine our growth.

Your most recent book is titled “The Price of Inequality.” Conservatives are pushing back, however, at the very idea that inequality is growing. One of Romney’s advisers just published an Op-Ed in the Wall Street Journal declaring, basically, that because everybody has a cellphone and an HDTV now, we’re better off than we were 10 years ago.

A lot of people living in shacks in South Africa also have cellphones and TVs, but that doesn’t mean they have an adequate standard of living — adequate nutrition or access to adequate healthcare, adequate life expectancies …

In any case, when we measure inequality we take into account the fact that the prices of some things go down while the prices of other things go up. That’s what we call “real income” — adjusting for those prices. And median household real income today is lower than it was 15 years ago.

You’ve made the negative case for how the economy will suffer if Romney is elected. Is there a positive case to be made for Obama? You’ve been one of the people on the left most critical of Obama’s efforts on the economy. Why should progressives vote for him now?

I think the main reason, quite honestly, to vote for him is that if he loses there could be a major step backward in every aspect. Not the least important of which is the importance of the Supreme Court, which would affect inequality of political power, as with the Citizens United case. The Court will also rule on basic human rights, gender rights, discrimination, things I think progressives should care a lot about.

But in terms of the economy, while I’ve been critical, there still has been progress in an awful lot of areas. Less progress than there should have been, less progress than was promised, but progress all the same.

Where do you see that progress?

Healthcare. Access to healthcare for everybody is an important step. It wasn’t the kind of deep reform that one would have liked where you would have done something about the pharmaceutical industry and health insurance industry and so forth, but it did result in increased access and that was terribly important. In education, getting the banks out of student loans saved $80 billion over 10 years. That’s a big deal. So while the housing program …

I was about to ask, what have been your biggest disappointments?

Housing policy has been a big disappointment. But compared to Bush, who didn’t do anything, and the Republicans, who haven’t proposed anything — Romney has been totally silent on the issue — at least Obama did something. So I am disappointed, but it represents a small step forward rather than zero. And I am worried that under Romney we will go back to the kind of deregulatory environment where we allow the banks to exploit our homeowners once again.

Looking ahead, are there things Obama could do that would represent a real step forward, rather than just consolidate what has already been achieved, or simply prevent going backward?

There aren’t many magic bullets, but let me talk about a couple things. Obviously, more progressive taxation — getting rid of the distortionary provisions in corporate welfare, special treatment of capital gains, carried interest — would make our economy more efficient and less unequal. Then there are a set of reforms on what I call economic legislation: finishing financial sector reform, strengthening corporate governance. More effective enforcement of competition that would eliminate the pervasive monopoly power that’s growing in our economy. Bankruptcy reform that would allow appropriate discharge of student debt. Stopping the for-profit schools that are basically funded by the U.S. government that are taking advantage of so many poor people.

We can also cut back on defense spending and use that money to invest in infrastructure and R&D, and make more investments in education to try to start dealing with the problems caused by the lack of equality of opportunity.  If Obama wins, the first item on the agenda is dealing with the “fiscal cliff.” A lot of progressives are worried that Obama will seek some kind of “grand bargain” that ends up slashing the safety net. What do you think will happen? What would you like to see happen?

I’ve been involved in this business long enough to know that the outcome won’t be what I would have wanted if I could do it alone. But the kind of compromise that I would like would begin with significant tax increases as a result of the elimination of corporate welfare buried in the tax code, special treatment of capital gains, the Cayman Islands tax avoidance setup, a whole set of things of that kind.

On the expenditure side, I’d like to see the biggest chunk come out of the military, I think we’re spending too much on weapons that don’t work against enemies that don’t exist. We need to spend our money more smartly — that’s where I would see the biggest chunk of expenditure cuts.

I think that there is scope for fine-tuning our Social Security system. One of the easiest solutions is increasing the age of retirement, but that only works for people like me who have high incomes and whose life expectancy and health is quite good. For a lot of people at the bottom that’s not true, so there can’t just be an across-the-board increase in age of retirement.

Where does trade fit into this overall equation? Both Obama and Romney have been competing on the basis of who will be tougher on China. Is that really a source of our economic problems?

No. I think Romney has behaved unusually irresponsibly for a presidential candidate. I know that Obama has tried to balance the need to interact with China and be tough, both for political reasons and because there have been certain abuses. Whether he has drawn the right line, I don’t know, there are some judgment calls, some of the particular cases that he has brought against China have been misguided. But he’s been trying to keep a balanced position and I think he’s done it relatively well, certainly in terms of keeping the level of heat down

Romney has taken the irresponsible position of promising on “Day One” to call China a currency manipulator. Doing that gives you no room for wiggle. That means on Day One he opens a trade war.

Not only has he not recognized that China has already appreciated its currency but he also hasn’t recognized that a stronger yuan won’t affect America’s multilateral trade deficit very much. What will happen is we will import more goods from other developing countries and less from China. So what?

One of the biggest areas of progressive disappointment with respect to Obama has to do with banking policy. Do you see any chance of improvement there?

We face a choice between someone who is viewed as being too close to the financial industry and somebody who is in the financial industry. Of the two I’d rather have someone who is close but not in it. So to me, there’s just not much choice.

I think a lot will ride on who gets selected as the next treasury secretary. The reason I say that is I’m not sure that Obama has strong views on a lot of these issues. Therefore he may be more amenable — I don’t want to say “pushed around” — but he may be more amenable to being influenced by the banks. So there is at least an opening, depending on who gets chosen, for somewhat stronger regulation. I don’t know if we can count on it — there’s a battle going on right now, or will be going on, I’m sure, as soon as the election is over, over who will succeed Timothy Geithner. And you know the banks will want to see someone of the same ilk.

Anybody you would like to see there?

There are lots of names of people who have done quite a good job. Gary Gensler at CFTC [Commodity Futures Trading Commission] and Sheila Bair at FDIC [Federal Deposit Insurance Corp.] really performed their role as regulators in an admirable way. I think that there are good people, the question is whether they will survive the pressure that the banks bring to bear.

I certainly hope there will be a lot of pressure from the other side, too, on the grounds that, look, now’s the time to really do something.
http://www.salon.com/2012/11/02/joseph_stiglitz_makes_the_case_for_obama/?source=newsletter
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« Reply #1 on: November 02, 2012, 10:54:33 AM »

most repubs will admit the plan doesn't make sense, or is very unclear.

The point is, they hate obama more.   They would elect a man with no plan, the romney plan, or a plan to tax everyone in lollipops. 


ABO.
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« Reply #2 on: November 02, 2012, 11:02:33 AM »

most repubs will admit the plan doesn't make sense, or is very unclear.

The point is, they hate obama more.   They would elect a man with no plan, the romney plan, or a plan to tax everyone in lollipops.  


ABO.

here's is what I don't get about Repubs

It's clear that Romney is a pathological liar and he lies when there is no reason at all (the sign of a true sociopath)

Take the jeep thing, why not just say he made a mistake and move on.   When you've got a guy who will continue to lie to your face when both YOU and HE know that what is saying is a lie how do you then proceed to trust him on ANYTHING

It's obvious to me that Romeny is a complete con man and has no f'ng idea how he will accomplish any of the stuff he claims he will do.   People from left, right and center (and whatever Fox news is) have asked him these questions and he has no answers other than a laugh,that constipated smile and his magic underwear

That phony food drive from a few days ago will be emblematic of a Romney admninistration
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« Reply #3 on: November 02, 2012, 11:05:06 AM »

most repubs will admit the plan doesn't make sense, or is very unclear.

The point is, they hate obama more.   They would elect a man with no plan, the romney plan, or a plan to tax everyone in lollipops. 


ABO.


CAN EVEN ONE OF YOU OBAMA C U N T S  DEFEND THIS?


HE HAD A PLAN TOO REMEMBER? 


* unemployment-against-projections-august.jpg (31.42 KB, 618x411 - viewed 82 times.)
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« Reply #4 on: November 02, 2012, 11:10:35 AM »


CAN EVEN ONE OF YOU OBAMA C U N T S  DEFEND THIS?


HE HAD A PLAN TOO REMEMBER? 


can you remind me again who created this chart and when ?
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« Reply #5 on: November 02, 2012, 11:13:34 AM »

can you remind me again who created this chart and when ?

It was his economic advisor Romer who used it to advocate for passage of the stim bill. 

So again - obama had a plan and IT DID FAIL 

Romney has a plan and it will PROBABLY FAIL 


The choice is probable fail vs proven fail.  Easy choice. 
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« Reply #6 on: November 02, 2012, 11:24:05 AM »

Romney has a plan and it will PROBABLY FAIL 

LOL @ your ringing endorsement Smiley
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« Reply #7 on: November 02, 2012, 11:30:21 AM »

It was his economic advisor Romer who used it to advocate for passage of the stim bill. 

So again - obama had a plan and IT DID FAIL 

Romney has a plan and it will PROBABLY FAIL 


The choice is probable fail vs proven fail.  Easy choice. 

So within weeks of taking office and at least year before they even knew the true depth of the damage to the economy.......right?

I'm sure you think this is proof that we would have been better off wittout doing anything.....right

Is that what you read from that chart?
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« Reply #8 on: November 02, 2012, 11:32:10 AM »

So within weeks of taking office and at least year before they even knew the true depth of the damage to the economy.......right?

I'm sure you think this is proof that we would have been better off wittout doing anything.....right

Is that what you read from that chart?

Obama campaigned for a year saying it was worst since the great depression and that he could fix ity in one term remember?
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« Reply #9 on: November 02, 2012, 11:57:26 AM »

Straw,

I usually don't engage you directly because I think you're a complete moron. However, I will make an exception in this case. Contrast Obama with Romney for a moment and consider the following: (a) Obama has no plan, unless you consider failure a "plan" (b) Obama has lied about every single aspect of his Presidency from the 2008 Campaign until now. (c) Obama has dodged, deflected, deceived and ducked every single tough question surrounding his background, Presidency and second term agenda (in the seldom and unlikely happenstance that someone in his re-election campaign aka the MSM has mistakenly asked him a tough question). (d) 4 days before the election lets recap Obama's economic achievements:

- First Credit downgrade in US history
- Highest deficits in US history
- Slowest economic growth rate since Great Depression (although we were told the recovery began in 2009)
- Record high unemployment
- Fed has decided to print money in perpetuity as a consequence of Obama's idiotic economic policies to subsidize more garbage mortgages
- GM takeover has been an unmitigated failure-- stock price has plummeted, Volt has been taken out of production
- Hundreds of Billions of dollars flushed down the toilet for Green Energy Scam Companies set up by Obama Bundlers-- Has a single one NOT filed for bankruptcy?
- Record high gas prices
- Record high food prices
- The middle class has shrunk under the Obama administration
- Americans are poorer under the Obama administration
- Record high number of Americans on food stamps
- Obama has refused to take any steps toward making America energy independent and has actually gone out of his way to destroy American jobs in the energy sector-- Keystone Pipeline, Coal Industry, Offshore drilling ban etc.
- Obama failed to earn a single vote in support of his budget proposals from either Party in both houses of Congress. Not one.
- He appointed a bipartisan economic advisory counsel (Simpson Bowles) and then ignored all of its recommendations

I can continue, but I have stuff to do and can't waste the rest of my day running down the laundry list of failures.

Calling Romney a "liar" and knocking his economic plan speaks volumes about how willfully blind and delusional you are about the soon to be former President.  
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« Reply #10 on: November 02, 2012, 11:57:58 AM »

This guy is no fan of Obama but he has the clarity to know that true dangers of Romney

http://www.salon.com/2012/11/02/joseph_stiglitz_makes_the_case_for_obama/?source=newsletter

But Obama is a commie so reality doesnt matter
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« Reply #11 on: November 02, 2012, 12:00:17 PM »

Obama campaigned for a year saying it was worst since the great depression and that he could fix ity in one term remember?

bfd - at the time he said that he didn't know that he would get ZERO cooperation from the Repubs
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« Reply #12 on: November 02, 2012, 12:03:13 PM »

bfd - at the time he said that he didn't know that he would get ZERO cooperation from the Repubs


He didnt need or try to get repub support the first two years remember? 
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« Reply #13 on: November 02, 2012, 12:10:43 PM »

He didnt need or try to get repub support the first two years remember? 

So you are saying he should his true agenda through?
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« Reply #14 on: November 02, 2012, 12:15:32 PM »

So you are saying he should his true agenda through?

He tried his true agenda and we got the african ball washing program remember? 
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« Reply #15 on: November 02, 2012, 12:19:14 PM »

Straw,

I usually don't engage you directly because I think you're a complete moron. However, I will make an exception in this case. Contrast Obama with Romney for a moment and consider the following: (a) Obama has no plan, unless you consider failure a "plan" (b) Obama has lied about every single aspect of his Presidency from the 2008 Campaign until now. (c) Obama has dodged, deflected, deceived and ducked every single tough question surrounding his background, Presidency and second term agenda (in the seldom and unlikely happenstance that someone in his re-election campaign aka the MSM has mistakenly asked him a tough question). (d) 4 days before the election lets recap Obama's economic achievements:

- First Credit downgrade in US history
- Highest deficits in US history

- Slowest economic growth rate since Great Depression (although we were told the recovery began in 2009)
- Record high unemployment
- Fed has decided to print money in perpetuity as a consequence of Obama's idiotic economic policies to subsidize more garbage mortgages
- GM takeover has been an unmitigated failure-- stock price has plummeted, Volt has been taken out of production
- Hundreds of Billions of dollars flushed down the toilet for Green Energy Scam Companies set up by Obama Bundlers-- Has a single one NOT filed for bankruptcy?
- Record high gas prices
- Record high food prices
- The middle class has shrunk under the Obama administration
- Americans are poorer under the Obama administration
- Record high number of Americans on food stamps
- Obama has refused to take any steps toward making America energy independent and has actually gone out of his way to destroy American jobs in the energy sector-- Keystone Pipeline, Coal Industry, Offshore drilling ban etc.
- Obama failed to earn a single vote in support of his budget proposals from either Party in both houses of Congress. Not one.
- He appointed a bipartisan economic advisory counsel (Simpson Bowles) and then ignored all of its recommendations

I can continue, but I have stuff to do and can't waste the rest of my day running down the laundry list of failures.

Calling Romney a "liar" and knocking his economic plan speaks volumes about how willfully blind and delusional you are about the soon to be former President.  


you're more of a pompous blowhard than usual today but just as stupid as ever

I don't have time to address all of your claims so let's just take the first two as a test of your intellegence and honsetly

The credit downgrade was due to the gridlock in Washington (per S&P) and that was caused by Republicans playing politics with the debt ceiling  so if you want to piss about the downgrade then make sure you blame the right people

Obama walked into office with a 1.2 trillion dollar deficit for 2009 (per CBO before he took office) and when the stimulus was added it was 1.41 trillion and he has lowered it every year that he has been in office

If you want to concede those two facts I'll be glad to address the rest of your claims (they are not all COMPLETELY false though your premise that they are Obamas fault is)

If you can't deal with facts then there is no point wasting time going any further






* Deficit Chart.jpg (23.76 KB, 600x353 - viewed 65 times.)
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« Reply #16 on: November 02, 2012, 12:29:25 PM »

He didnt need or try to get repub support the first two years remember?  

false

I know right wingers like to throw that lie around but lets look at the facts

Can I assume now that you know the facts that you will stop repeating that lie ?

What this shows is is that there were only two time periods during the 111th Congress when the Democrats had a 60 seat majority:

■From July 7. 2009 (when Al Franken was officially seated as the Senator from Minnesota after the last of Norm Coleman’s challenges came to an end) to August 25, 2009 (when Ted Kennedy died, although Kennedy’s illness had kept him from voting for several weeks before that date at least); and
■From September 25, 2009 (when Paul Kirk was appointed to replace Kennedy) to February 4, 2010 (when Scott Brown took office after defeating Martha Coakley);
■For one day in September 2009, Republicans lacked 40 votes due to the resignation of Mel Martinez, who was replaced the next day by George LeMieux

So, to the extent there was a filibuster proof majority in the Senate it lasted during two brief periods which lasted for a total of just over five months when counted altogether (and Congress was in its traditional summer recess for most of the July-August 2009 time frame).


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« Reply #17 on: November 02, 2012, 12:32:57 PM »

So? 

No president in recent memory has had margins like he had and he blew it and it never going to get that again.   So what are you saying?   He can't get shit done unless he has total control?  No kidding!  But that is not how it is supposed to work. 


false

I know right wingers like to throw that lie around but lets look at the facts

Can I assume now that you know the facts that you will stop repeating that lie ?

What this shows is is that there were only two time periods during the 111th Congress when the Democrats had a 60 seat majority:

■From July 7. 2009 (when Al Franken was officially seated as the Senator from Minnesota after the last of Norm Coleman’s challenges came to an end) to August 25, 2009 (when Ted Kennedy died, although Kennedy’s illness had kept him from voting for several weeks before that date at least); and
■From September 25, 2009 (when Paul Kirk was appointed to replace Kennedy) to February 4, 2010 (when Scott Brown took office after defeating Martha Coakley);
■For one day in September 2009, Republicans lacked 40 votes due to the resignation of Mel Martinez, who was replaced the next day by George LeMieux

So, to the extent there was a filibuster proof majority in the Senate it lasted during two brief periods which lasted for a total of just over five months when counted altogether (and Congress was in its traditional summer recess for most of the July-August 2009 time frame).

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« Reply #18 on: November 02, 2012, 12:36:45 PM »

So?  

No president in recent memory has had margins like he had and he blew it and it never going to get that again.   So what are you saying?   He can't get shit done unless he has total control?  No kidding!  But that is not how it is supposed to work. 



so.... you lied

that is what's "so"

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« Reply #19 on: November 02, 2012, 01:54:01 PM »

you're more of a pompous blowhard than usual today but just as stupid as ever

I don't have time to address all of your claims so let's just take the first two as a test of your intellegence and honsetly

The credit downgrade was due to the gridlock in Washington (per S&P) and that was caused by Republicans playing politics with the debt ceiling  so if you want to piss about the downgrade then make sure you blame the right people

Obama walked into office with a 1.2 trillion dollar deficit for 2009 (per CBO before he took office) and when the stimulus was added it was 1.41 trillion and he has lowered it every year that he has been in office

If you want to concede those two facts I'll be glad to address the rest of your claims (they are not all COMPLETELY false though your premise that they are Obamas fault is)

If you can't deal with facts then there is no point wasting time going any further



The downgrade wasn't because of Washington Gridlock you imbecile. Only a relentlessly mindless liberal could make such an amazingly stupid argument. The downgrade was because of SPENDING AND DEBT. What exactly were the credit agencies waiting for? More Washington policies that burden future generations of Americans with wasteful and out of control spending? I guess the solution all along was to continue spending money we don't have on shit we don't need. Why is it that Washington gridlock only seemed to appear out of thin air as a convenient excuse once it became apparent that all of Obama's policies had failed miserably and the country had resoundingly rejected his agenda via the 2010 midterms.

The bottom line is that Obama and the Democrats are not serious about balancing the budget at all. It was Obama, Reid and company that forced the gutless GOP leadership to accept the pathetic debt ceiling deal last year. S+P correctly concluded that the debt ceiling deal was a joke.

But why take my word for it? Let's review what S+P offered as its explanation: http://www.standardandpoors.com/ratings/articles/en/us/?assetID=1245316529563

We have lowered our long-term sovereign credit rating on the United
States of America to 'AA+' from 'AAA' and affirmed the 'A-1+' short-term
rating.
We have also removed both the short- and long-term ratings from
CreditWatch negative.
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 outlook on the long-term rating is negative. We could lower the
long-term rating to 'AA' within the next two years if we see that less
reduction in spending than agreed to, higher interest rates, or new
fiscal pressures during the period result in a higher general government
debt trajectory than we currently assume in our base case


Also==> A second downgrade occured, but it was barely reported:
http://www.dailyfinance.com/2012/09/14/ratings-agency-egan-jones-downgrades-us-debt/

Moodys will be next if Obama gets a second term.

As to your second point-- we are now in debt 16 trillion dollars. http://www.forbes.com/sites/billflax/2012/09/04/the-national-debt-16-trillion-dollars-of-moral-cultural-and-political-decay/,

Obama has added Trillion plus deficits each year of his Presidency, http://www.usatoday.com/story/theoval/2012/10/01/obama-faces-trillion-dollar-deficits/1606435/

http://www.brillig.com/debt_clock/
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« Reply #20 on: November 02, 2012, 03:05:25 PM »

So you main concernwith Obama is the deficit and debt so to fix this you elect a man who will cut taxes and increase military spending lmafo

Either you guys are stupid as hell or you are full of shit

Because Romney is gonna skyrocket the debt and deficit
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« Reply #21 on: November 02, 2012, 03:20:55 PM »

The downgrade wasn't because of Washington Gridlock you imbecile. Only a relentlessly mindless liberal could make such an amazingly stupid argument. The downgrade was because of SPENDING AND DEBT. What exactly were the credit agencies waiting for? More Washington policies that burden future generations of Americans with wasteful and out of control spending? I guess the solution all along was to continue spending money we don't have on shit we don't need. Why is it that Washington gridlock only seemed to appear out of thin air as a convenient excuse once it became apparent that all of Obama's policies had failed miserably and the country had resoundingly rejected his agenda via the 2010 midterms.

The bottom line is that Obama and the Democrats are not serious about balancing the budget at all. It was Obama, Reid and company that forced the gutless GOP leadership to accept the pathetic debt ceiling deal last year. S+P correctly concluded that the debt ceiling deal was a joke.

But why take my word for it? Let's review what S+P offered as its explanation: http://www.standardandpoors.com/ratings/articles/en/us/?assetID=1245316529563

We have lowered our long-term sovereign credit rating on the United
States of America to 'AA+' from 'AAA' and affirmed the 'A-1+' short-term
rating.
We have also removed both the short- and long-term ratings from
CreditWatch negative.
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 outlook on the long-term rating is negative. We could lower the
long-term rating to 'AA' within the next two years if we see that less
reduction in spending than agreed to, higher interest rates, or new
fiscal pressures during the period result in a higher general government
debt trajectory than we currently assume in our base case

^^^^^^^

THE PART YOU CONVENIENTLY LEFT OUT STARTS RIGHT AFTER THE PARAGRAPH ABOVE




Also==> A second downgrade occured, but it was barely reported:
http://www.dailyfinance.com/2012/09/14/ratings-agency-egan-jones-downgrades-us-debt/

Moodys will be next if Obama gets a second term.

As to your second point-- we are now in debt 16 trillion dollars. http://www.forbes.com/sites/billflax/2012/09/04/the-national-debt-16-trillion-dollars-of-moral-cultural-and-political-decay/,

Obama has added Trillion plus deficits each year of his Presidency, http://www.usatoday.com/story/theoval/2012/10/01/obama-faces-trillion-dollar-deficits/1606435/

http://www.brillig.com/debt_clock/

here is the part you conveniently forgot to copy and paste


Quote
TORONTO (Standard & Poor's) Aug. 5, 2011--Standard & Poor's Ratings Services
said today that it lowered its long-term sovereign credit rating on the United
States of America to 'AA+' from 'AAA'. Standard & Poor's also said that the
outlook on the long-term rating is negative. At the same time, Standard &
Poor's affirmed its 'A-1+' short-term rating on the U.S. In addition, Standard
& Poor's removed both ratings from CreditWatch, where they were placed on July
14, 2011, with negative implications.
     The transfer and convertibility (T&C) assessment of the U.S.--our
assessment of the likelihood of official interference in the ability of
U.S.-based public- and private-sector issuers to secure foreign exchange for
debt service--remains 'AAA'.
     We lowered our long-term rating on the U.S. because we believe that the
prolonged controversy over raising the statutory debt ceiling and the related
fiscal policy debate indicate that further near-term progress containing the
growth in public spending, especially on entitlements, or on reaching an
agreement on raising revenues is less likely than we previously assumed and
will remain a contentious and fitful process.
We also believe that the fiscal
consolidation plan that Congress and the Administration agreed to this week
falls short of the amount that we believe is necessary to stabilize the
general government debt burden by the middle of the decade.
     Our lowering of the rating was prompted by our view on the rising public
debt burden and our perception of greater policymaking uncertainty,
consistent
with our criteria (see "Sovereign Government Rating Methodology and Assumptions
," June 30, 2011, especially Paragraphs 36-41). Nevertheless, we view the U.S.
federal government's other economic, external, and monetary credit attributes,
which form the basis for the sovereign rating, as broadly unchanged.
     We have taken the ratings off CreditWatch because the Aug. 2 passage of
the Budget Control Act Amendment of 2011 has removed any perceived immediate
threat of payment default posed by delays to raising the government's debt
ceiling. In addition, we believe that the act provides sufficient clarity to
allow us to evaluate the likely course of U.S. fiscal policy for the next few
years.
     The political brinksmanship of recent months highlights what we see as
America's governance and policymaking becoming less stable, less effective,
and less predictable than what we previously believed. The statutory debt
ceiling and the threat of default
have become political bargaining chips in
the debate over fiscal policy. Despite this year's wide-ranging debate, in our
view, the differences between political parties have proven to be
extraordinarily difficult to bridge, and, as we see it, the resulting
agreement fell well short of the comprehensive fiscal consolidation program
that some proponents had envisaged until quite recently
. Republicans and
Democrats have only been able to agree to relatively modest savings on
discretionary spending while delegating to the Select Committee decisions on
more comprehensive measures. It appears that for now, new revenues have
dropped down on the menu of policy options. In addition, the plan envisions
only minor policy changes on Medicare and little change in other entitlements,
the containment of which we and most other independent observers regard as key
to long-term fiscal sustainability.
     Our opinion is that elected officials remain wary of tackling the
structural issues required to effectively address the rising U.S. public debt
burden in a manner consistent with a 'AAA' rating and with 'AAA' rated
sovereign peers (see Sovereign Government Rating Methodology and Assumptions,"
June 30, 2011, especially Paragraphs 36-41). In our view, the difficulty in
framing a consensus on fiscal policy weakens the government's ability to
manage public finances and diverts attention from the debate over how to
achieve more balanced and dynamic economic growth in an era of fiscal
stringency and private-sector deleveraging (ibid). A new political consensus
might (or might not) emerge after the 2012 elections, but we believe that by
then, the government debt burden will likely be higher, the needed medium-term
fiscal adjustment potentially greater, and the inflection point on the U.S.
population's demographics and other age-related spending drivers closer at
hand (see "Global Aging 2011: In The U.S., Going Gray Will Likely Cost Even
More Green, Now," June 21, 2011).
     Standard & Poor's takes no position on the mix of spending and revenue
measures that Congress and the Administration might conclude is appropriate
for putting the U.S.'s finances on a sustainable footing.
     The act calls for as much as $2.4 trillion of reductions in expenditure
growth over the 10 years through 2021. These cuts will be implemented in two
steps: the $917 billion agreed to initially, followed by an additional $1.5
trillion that the newly formed Congressional Joint Select Committee on Deficit
Reduction is supposed to recommend by November 2011. The act contains no
measures to raise taxes or otherwise enhance revenues, though the committee
could recommend them.
     The act further provides that if Congress does not enact the committee's
recommendations, cuts of $1.2 trillion will be implemented over the same time
period. The reductions would mainly affect outlays for civilian discretionary
spending, defense, and Medicare. We understand that this fall-back mechanism
is designed to encourage Congress to embrace a more balanced mix of
expenditure savings, as the committee might recommend.
     We note that in a letter to Congress on Aug. 1, 2011, the Congressional
Budget Office (CBO) estimated total budgetary savings under the act to be at
least $2.1 trillion over the next 10 years relative to its baseline
assumptions. In updating our own fiscal projections, with certain
modifications outlined below, we have relied on the CBO's latest "Alternate
Fiscal Scenario" of June 2011, updated to include the CBO assumptions
contained in its Aug. 1 letter to Congress. In general, the CBO's "Alternate
Fiscal Scenario" assumes a continuation of recent Congressional action
overriding existing law.
     We view the act's measures as a step toward fiscal consolidation.
However, this is within the framework of a legislative mechanism that leaves
open the details of what is finally agreed to until the end of 2011, and
Congress and the Administration could modify any agreement in the future. Even
assuming that at least $2.1 trillion of the spending reductions the act
envisages are implemented, we maintain our view that the U.S. net general
government debt burden (all levels of government combined, excluding liquid
financial assets) will likely continue to grow. Under our revised base case
fiscal scenario--which we consider to be consistent with a 'AA+' long-term
rating and a negative outlook--we now project that net general government debt
would rise from an estimated 74% of GDP by the end of 2011 to 79% in 2015 and
85% by 2021. Even the projected 2015 ratio of sovereign indebtedness is high
in relation to those of peer credits and, as noted, would continue to rise
under the act's revised policy settings.
     Compared with previous projections, our revised base case scenario now
assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012,
remain in place. We have changed our assumption on this because the majority
of Republicans in Congress continue to resist any measure that would raise
revenues, a position we believe Congress reinforced by passing the act. Key
macroeconomic assumptions in the base case scenario include trend real GDP
growth of 3% and consumer price inflation near 2% annually over the decade.
     Our revised upside scenario--which, other things being equal, we view as
consistent with the outlook on the 'AA+' long-term rating being revised to
stable--retains these same macroeconomic assumptions. In addition, it
incorporates $950 billion of new revenues on the assumption that the 2001 and
2003 tax cuts for high earners lapse from 2013 onwards, as the Administration
is advocating. In this scenario, we project that the net general government
debt would rise from an estimated 74% of GDP by the end of 2011 to 77% in 2015
and to 78% by 2021.
     Our revised downside scenario--which, other things being equal, we view
as being consistent with a possible further downgrade to a 'AA' long-term
rating--features less-favorable macroeconomic assumptions, as outlined below
and also assumes that the second round of spending cuts (at least $1.2
trillion) that the act calls for does not occur. This scenario also assumes
somewhat higher nominal interest rates for U.S. Treasuries. We still believe
that the role of the U.S. dollar as the key reserve currency confers a
government funding advantage, one that could change only slowly over time, and
that Fed policy might lean toward continued loose monetary policy at a time of
fiscal tightening. Nonetheless, it is possible that interest rates could rise
if investors re-price relative risks. As a result, our alternate scenario
factors in a 50 basis point (bp)-75 bp rise in 10-year bond yields relative to
the base and upside cases from 2013 onwards. In this scenario, we project the
net public debt burden would rise from 74% of GDP in 2011 to 90% in 2015 and
to 101% by 2021.
     Our revised scenarios also take into account the significant negative
revisions to historical GDP data that the Bureau of Economic Analysis
announced on July 29. From our perspective, the effect of these revisions
underscores two related points when evaluating the likely debt trajectory of
the U.S. government. First, the revisions show that the recent recession was
deeper than previously assumed, so the GDP this year is lower than previously
thought in both nominal and real terms. Consequently, the debt burden is
slightly higher. Second, the revised data highlight the sub-par path of the
current economic recovery when compared with rebounds following previous
post-war recessions. We believe the sluggish pace of the current economic
recovery could be consistent with the experiences of countries that have had
financial crises in which the slow process of debt deleveraging in the private
sector leads to a persistent drag on demand. As a result, our downside case
scenario assumes relatively modest real trend GDP growth of 2.5% and inflation
of near 1.5% annually going forward.
     When comparing the U.S. to sovereigns with 'AAA' long-term ratings that
we view as relevant peers--Canada, France, Germany, and the U.K.--we also
observe, based on our base case scenarios for each, that the trajectory of the
U.S.'s net public debt is diverging from the others. Including the U.S., we
estimate that these five sovereigns will have net general government debt to
GDP ratios this year ranging from 34% (Canada) to 80% (the U.K.), with the
U.S. debt burden at 74%. By 2015, we project that their net public debt to GDP
ratios will range between 30% (lowest, Canada) and 83% (highest, France), with
the U.S. debt burden at 79%. However, in contrast with the U.S., we project
that the net public debt burdens of these other sovereigns will begin to
decline, either before or by 2015.
     Standard & Poor's transfer T&C assessment of the U.S. remains 'AAA'. Our
T&C assessment reflects our view of the likelihood of the sovereign
restricting other public and private issuers' access to foreign exchange
needed to meet debt service. Although in our view the credit standing of the
U.S. government has deteriorated modestly, we see little indication that
official interference of this kind is entering onto the policy agenda of
either Congress or the Administration. Consequently, we continue to view this
risk as being highly remote.
     The outlook on the long-term rating is negative. As our downside
alternate fiscal scenario illustrates, a higher public debt trajectory than we
currently assume could lead us to lower the long-term rating again. On the
other hand, as our upside scenario highlights, if the recommendations of the
Congressional Joint Select Committee on Deficit Reduction--independently or
coupled with other initiatives, such as the lapsing of the 2001 and 2003 tax
cuts for high earners--lead to fiscal consolidation measures beyond the
minimum mandated, and we believe they are likely to slow the deterioration of
the government's debt dynamics, the long-term rating could stabilize at 'AA+'.
     On Monday, we will issue separate releases concerning affected ratings in
the funds, government-related entities, financial institutions, insurance,
public finance, and structured finance sectors
.

http://www.standardandpoors.com/ratings/articles/en/us/?assetID=1245316529563
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« Reply #22 on: November 02, 2012, 03:34:20 PM »

George you just been owned
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