The Tea Party Was Right


The government’s credit rating was cut today.  For the first time in the history of the planet the United States of America is no longer a sure bet on it’s credit.  To be sure, AA+ isn’t nothin to sneeze at, but it’s not, ahem, Money.

The impact:

S&P cut the long-term U.S. credit rating by one notch to AA-plus on concerns about the government’s budget deficits and rising debt burden. The move is likely to raise borrowing costs eventually for the American government, companies and consumers.

And the why:

“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,” S&P said in a statement.

The deal reached by Congress and signed by the President doesn’t do anything about our fiscal woes.  Cries from the Left that we aren’t raising revenue ring hollow as the United States regularly see year over year revenue gains of over 7%; revenue is NOT the trouble.

Spending is the problem.

And the liberal Left will not listen and take action.  They continue down the path that somehow someone isn’t paying their fair share yet irresponsibly care to put pen to paper and define what that fair share really is.

What we are seeing now is the natural result of the kind of quasi socialism that exists in the world today.

The Tea Party is right.

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3 comments
  1. nickgb said:

    What we are seeing now is the natural result of the kind of quasi socialism that exists in the world today.

    Then explain why Scandinavia and most of Europe, plus Canada, have no problems with S&P.

    • pino said:

      Then explain why Scandinavia and most of Europe, plus Canada, have no problems with S&P.

      The strong European nations are either more economically free than we are or are close. Further, they don’t have the same troubles with debt and spending that we do.

  2. Germany passed a balanced budget amendment and an austerity program that cut spending and increased taxes. The European countries doing well have all had tax increases. It’s not just the spending that’s the problem, but our tax rates, especially on the wealthy are very low. Look at this chart:

    Note that productivity increases stopped going to wage increases around 1990 (under both Clinton and Bush). This didn’t happen in Europe, since stronger unions kept wages growing. In the US tax cuts for the wealthy and powerless unions meant that the wealth increases from gains in productivity went to the wealthiest. That money went to create bubbles, and a huge chunk of it was invested overseas or spent on foreign consumables. This is an unsustainable economic structure, you need a functioning vibrant middle class. The wealthy can afford to pay a bit more, and if the tea party had given in on very small tax increases, they’d have had a massive $4 trillion deal that would have avoided the downgrade. That’s why I think this is a ‘teaparty downgrade.’

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