I’ve put off talking about S&P’s credit downgrade all morning, but I can’t hide from it by watching Arrested Development on Netflix download forever. Here we go.
Think Progress points out that S&P, in a press release, repeatedly sites GOP “intransigence” on taxes as their reasoning behind their downgrade. From the press release:
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.
What would S&P have to see to raise U.S. credit rating back to AAA?
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.
In other words, LET BUSH TAX CUTS FOR THE WEALTHY LAPSE! We need new revenue! We have spending problems COMBINED with a revenue problem. Duh.
Thank the teaparty, John Boehner, hostage-taker Mitch McConnell, Eric “I want what I want when I want it” Cantor, and all the members of the Republican-led House for bringing America into this historic milestone of a credit downgrade.
Once upon a time, Osama bin Laden wanted to bring economic collapse to the U.S. Ironically, it’s the Teaparty that seems to be on track to fulfill his wishes.