U.S. Credit Rating Downgraded.

[Rashiminos]

O*G the U.S has been downgraded wow this is amazing ........havent ive been saying this for a year now and no one had listen to me and told me this could never happen

People couldn't see 2008, so what happened afterward in their eyes is also a mystery.

 

[MrPopov]

I don't know why anyone would lend money to a nation with a debt greater than a trillion dollars in the first place, little alone 14 trillion.

It is actually entirely likely you ARE loaning the U.S. your money.... so thanks

 

[aw3524]

Egan Jones (NRSRO that downgraded from AAA to AA+ in mid-July):

The major factor driving credit quality is the relatively high level of debt and the difficulty in significantly cutting spending. We are taking a negative action not based on the delay in raising the debt ceiling but rather our concern about the high level of debt to GDP in excess of 100 percent compared to Canada's 35 percent.

 

[Tani Coyote]

It is actually entirely likely you ARE loaning the U.S. your money.... so thanks

Ironic, sad, and true all at once.

Governments buy the debts of other governments, after all, don't they? And the government rarely produces any money on its own... so logically, it's forcing the citizens to buy debt abroad.

 

[Singularity]

Typical ridiculous argument. The Citizens for Tax Justice estimated that between 2001 and 2010 the Bush Tax Cuts resulted in a 'loss' of $2.1T, or $2.5T with interest. So even taking the high end number, do you honestly want me to believe that the reason our debt is so high is because we 'lost' out on $2.5T in revenues in 10 years? Because that would be foolish.

The big problem is entitlement spending, especially social security and Medicare, but God forbid Democrats ever touch those.

Both Cutlass and you are right in your argumentation. Then there's a few causes that you've both left out, which you can't do much about to remedy since the damage has been done. Wars have been fought and toxic loans has been defaulted.

Seems to me that S&P hasn't put the blame squarely on either GOP or Dem's, rather both party's inability to meet at the halfway with measures that turns the needle from the red and towards the black. The partizanship knows no bounds it seems, even in the face of such a challenge as you're facing with your present deficit.

 

[Bei1052]

No, Cutlass is wrong. Dead wrong, in fact. He was the one who mentioned tax cuts causing the problem. Such a statement is ridiculous on its face, specifically because those tax cuts simply did not contribute significantly to the deficit. Or, at least, not nearly as much as such programs as Medicare and Social Security-- programs which Democrats adamantly refuse to make significant cuts to. That not partisanship. That's just speaking the truth.

 

[JollyRoger]

No, Cutlass is wrong. Dead wrong, in fact. He was the one who mentioned tax cuts causing the problem. Such a statement is ridiculous on its face, specifically because those tax cuts simply did not contribute significantly to the deficit. Or, at least, not nearly as much as such programs as Medicare and Social Security-- programs which Democrats adamantly refuse to make significant cuts to. That not partisanship. That's just speaking the truth.

We had a surplus back before the tax cuts.

 

[Bei1052]

We had a surplus back before the tax cuts.

We had a surplus because (1) Clinton couldn't pass the programs he wanted with a Republican controlled congress and (2) revenues were high as the dot.com bubble had not yet burst.

 

[TopGearFanatic]

Yes, because both the Republicans and Tea Partiers are the ones who adamantly refuse to cut spending in regards to the two biggest entitlement programs in the U.S.

They're also the ones who want to simply keep raising the debt ceiling and without the cuts you mentioned.

No, Cutlass is wrong. Dead wrong, in fact. He was the one who mentioned tax cuts causing the problem. Such a statement is ridiculous on its face, specifically because those tax cuts simply did not contribute significantly to the deficit. Or, at least, not nearly as much as such programs as Medicare and Social Security-- programs which Democrats adamantly refuse to make significant cuts to. That not partisanship. That's just speaking the truth.

And don't forget Obama's healthcare plan that will add more to our debt in the coming years...

 

[JollyRoger]

We had a surplus because (1) Clinton couldn't pass the programs he wanted with a Republican controlled congress and (2) revenues were high as the dot.com bubble had not yet burst.

And (3) reasonable marginal rates.

 

[Miles Teg]

No, Cutlass is wrong. Dead wrong, in fact. He was the one who mentioned tax cuts causing the problem. Such a statement is ridiculous on its face, specifically because those tax cuts simply did not contribute significantly to the deficit. Or, at least, not nearly as much as such programs as Medicare and Social Security-- programs which Democrats adamantly refuse to make significant cuts to. That not partisanship. That's just speaking the truth.

You're right. That's why S&P blasted Democrats over their inability to cut the deficit. Oh, wait...

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.

 

[aw3524]

We had a surplus back before the tax cuts.

So the table itself, according to the figures issued yesterday, showed the Federal Government ran a surplus. Absolutely false. This reporter ought to do his work. This crowd never has asked for or kept up with or checked the facts. Eric Planin--all he has to do is not spread rumors or get into the political message. Both Democrats and Republicans are all running this year and next and saying surplus, surplus. Look what we have done. It is false. The actual figures show that from the beginning of the fiscal year until now we had to borrow $127,800,000,000.

Sen. Hollings (D), 1999. We were very close to a surplus in 2000; the FY2001 budget was a move in the opposite direction (deficit of $133bil).

 

[JollyRoger]

I borrowed this year too, but I'm running a surplus.

 

[FriendlyFire]

They're also the ones who want to simply keep raising the debt ceiling and without the cuts you mentioned.

They're also the ones who protest "keep government out off my medicare".

 

[BasketCase]

No, Cutlass is wrong. Dead wrong, in fact. He was the one who mentioned tax cuts causing the problem. Such a statement is ridiculous on its face, specifically because those tax cuts simply did not contribute significantly to the deficit.

There's more to it than that. In the strict technical sense, Cutlass was right: we really did have a surplus before Bush's tax cuts. The problem is that said surplus was the result of CLINTON'S tax cuts. So the argument that tax cuts were the cause of our current crisis, is wrong.

Doesn't matter what the tax code is. If you collect X dollars in tax revenue and then spend more than X, you will go broke. We need to spend less than X.

 

[Bei1052]

You're right. That's why S&P blasted Democrats over their inability to cut the deficit. Oh, wait...

First of all, the S&P did not "blast" anyone. Quoting the S&P here:

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...

That "base-line" scenario the S&P was operating on in regards to the U.S. maintaining an AAA rating was based on a CBO report released last June/July on what needs to be done to solve the U.S.' long term debt problem. As it is, you're taking your quote out of context. It merely says that since no new revenues will be generated, that they're not going to operate on the "base-line" scenario anymore, and are readjusting their outlook on the U.S.' credit rating based on the CBO's alternate scenario which includes a continuation of the Bush Tax Cuts.

Now, in case you're wondering, that "base-line" scenario involved letting the Bush Tax Cuts expire next year as planned. It also involves extending the AMT from affecting around 3% of households today to affecting about 50% of households in the future.

If current law continued, revenues would also rise considerably; by the 2020s, they would reach higher levels relative to the size of the economy than ever recorded in the nation’s history. Under current law, revenues would jump from about 15 percent of GDP now to 19 percent in 2013 as the economic recovery increased taxable income, as the tax cuts enacted since 2001 expired in 2012 and 2013 as scheduled, and as the reach of the AMT expanded greatly (because, unlike most of the tax code, the dollar amounts of its parameters do not automatically increase with inflation). In later years, revenues would continue to rise relative to GDP, for three main reasons. First, ongoing increases in real income would push taxpayers into higher tax rate brackets. Second, ongoing inflation, although it is projected to be modest, would cause more people to owe tax under the AMT. And third, the excise tax on certain high-premium health insurance plans, which is scheduled to take effect in 2018, would have a growing impact on revenues. Taken together, those factors would cause marginal tax rates to increase and federal revenues to grow faster than the economy, reaching 23 percent of GDP in 2035. By comparison, federal revenues averaged 18 percent of GDP between 1971 and 2010, peaking at 20.6 percent of GDP in 2000.

If current law regarding the AMT remained unchanged, as assumed in the extended-baseline scenario, the alternative minimum tax would ultimately affect a significant share of taxpayers. Just 3 percent of households will pay the AMT in 2011—the last year in which temporarily higher exemption amounts are in effect under current law. However, in 2012—following the expiration of AMT relief at the end of 2011 but before the expiration at the end of 2012 of the income tax cuts extended by the 2010 tax act—the AMT would affect 18 percent of households, CBO projects. In 2013, the share of households affected by the AMT is estimated to fall to 11 percent because of the expiration of the income tax cuts extended by the 2010 tax act. In subsequent years, the share of households who owed more under the AMT than under the regular tax would gradually rise. By 2035, nearly half of the nation’s households would be subject to the alternative tax.

Link

Now just how many Democrats do you think would be on board with that?

There's more to it than that. In the strict technical sense, Cutlass was right: we really did have a surplus before Bush's tax cuts. The problem is that said surplus was the result of CLINTON'S tax cuts. So the argument that tax cuts were the cause of our current crisis, is wrong.

I know little on Clinton's tax cuts, so I can't comment. But Cutlass was talking squarely about the Bush Tax Cuts, and blaming those for the current debt crisis is nothing short of absurd.

Doesn't matter what the tax code is. If you collect X dollars in tax revenue and then spend more than X, you will go broke. We need to spend less than X.

Yes, we need to spend less, but that'll never happen since, apparently, the "rich" are an endless source of revenue.

 

[Luckymoose]

Unless all the budget cutting cuts the scholarships and grants. Something has to give.

They wouldn't dare, it would undermine both parties youth base and cause a political revolution.

 

[Dreadnought]

I'm amazed the lengths people go to in order to defend the President. He had control of Congress the first half of his term, and still failed to alleviate the trauma.

My only question is this: how much longer are you going to blame the government failures on the Bush tax cuts? Two years? Five years? ten?

Give me a break.

 

[JollyRoger]

My only question is this: how much longer are you going to blame the government failures on the Bush tax cuts?

How long are they going to stay in place?

 

[Rashiminos]

2013 as the economic recovery increased taxable income, as the tax cuts enacted since 2001 expired in 2012 and 2013 as scheduled, and as the reach of the AMT expanded greatly (because, unlike most of the tax code, the dollar amounts of its parameters do not automatically increase with inflation). In later years, revenues would continue to rise relative to GDP, for three main reasons. First, ongoing increases in real income would push taxpayers into higher tax rate brackets. Second, ongoing inflation, although it is projected to be modest, would cause more people to owe tax under the AMT.

Unabashed, unwarranted optimism.