Debt ceiling warnings and postures
Obama walked out of the debt ceiling talks yesterday, as Moody’s and Standard and Poor’s both threatened to downgrade US debt.
What happened at the last debt ceiling meeting
The best account of what happened at yesterday’s White House meeting is from The Daily Mail (London). Tempers were about to flare throughout. Then Representative Eric Cantor (R-VA), the House Republican Whip, suggested a short-term debt ceiling rise to carry through to the upcoming Presidential election.
That was when Obama lost his temper.
Eric, don’t call my bluff! Would Ronald Reagan be sitting here? I’ve reached my limit. This may bring my presidency down, but I will not yield on this. This process is confirming what the American people think is the worst about Washington: that everyone is more interested in posturing, political positioning, and protecting their base, than in resolving real problems.
With those words, Obama walked out. The Mail quotes an unconfirmed report from a Democrat that Obama dressed Cantor down, and then stood up, thus ending the meeting.
The one thing that everyone agrees on, is that they don’t agree. Obama and his Democratic colleagues want to raise taxes. Republicans want to cut spending.
What Moody’s and S&P say
Meanwhile, Moody’s Investors Service put the country’s credit rating under review. That’s the first step toward a downgrade. Moody’s said that they might lower the rating from Aaa to Aa, and might not restore the third “a” as quickly.
Standard and Poor’s gave a harsher warning. They will change the country’s credit rating from AAA to D if one check bounces or doesn’t go out on time. (Watch this video for details.) Everyone interprets that as saying that if the government does not raise the debt ceiling, S&P will score the country as in default.
But S&P has said something else, that most media organs are not reporting. Namely, that they will rate US debt as junk by 2030 if the government does not reform its entitlement programs. Not if Congress does not raise taxes. If Congress does not reform entitlements.
What Congress is saying
Congress is falling out on party lines. Senator Harry W. Reid (D-NV), the Senate Democratic Floor Leader, accused Cantor of behaving like a spoiled child. On the other side, Representative Joe Walsh (R-IL) flat-out accused the President of lying to the American public.
You know d____d well that, if August 2nd comes and goes, there’s plenty of money available to pay our debts and cover all of our Social Security obligations. And you also know that you, and only you, have the discretion to make those payments. What’s next, sir?
Walsh went on to ask whether Obama planned to hold anyone else up for ransom, as he held Social Security payees up for ransom two days ago.
The American people will, of course, have plenty to say next year. Obama’s words might then become prophetic, not hypothetical.
Featured image: a Weimar-era householder wheels a barrow full of worthless scrip to the corner baker to buy a loaf of bread.
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