S&P to Downgrade US Rating due to Republicans Refusing to Increase Taxes

The political drama and confusion surrounding the soap opera, kabuki-style theater we call Washington lately in the debt ceiling debate is not without consequences.

Waiting until the eleventh hour to agree on our debt ceiling being raised or not, our government to shutdown, or stay open for business is having a dramatic effect on America in its credit standing.

Today, a government official told ABC News that the federal government is expecting and preparing for bond rating agency Standard & Poor’s to downgrade the rating of US debt from its current AAA value — yet it’s unclear whether the demotion will be to AA+ rating or AA.

This is the first downgrade in US history. U.S. Treasuries, once undisputedly seen as the safest investment in the world, now are rated lower than bonds issued by countries such as the UK, Germany, France or Canada.

Both President Obama and House Speaker John Boehner forewarned that the consequences would be dire. Steadfast in opposition to negotiation was the Tea Party-led House now suffering a high 84% disapproving of their efforts thus far. The CNN poll was taken just after the debt ceiling was negotiated in what the left perceive as a hostage-style power grab.

Officials give the reasons to the credit standing demotion to be political confusion surrounding the process of raising the debt ceiling, and lack of confidence that the political system will be able to agree to more deficit reduction.

ABC reports:

A source says Republicans saying that they refuse to accept any tax increases as part of a larger deal will be part of the reason cited.

The official was unsure if the bond rating would be AA+ or AA.

My bold

The Obama administration, according to another government official, is not 100% certain of the downgrade but is preparing for the downgrade nevertheless, and if the demotion does occur the timing is uncertain as to when it will happen.

Before a downgrade is enacted, debate ensues which takes time (this could unfortunately be a replay of the soap opera we’ve witnessed the last couple of months) but Treasury Department officials in preparation for the worst have been stating the case for months that S&P should not downgrade U.S. debt.

With Sarah Palin deeming the recent heated debate over increasing or leaving the debt ceiling as is as to be simply, ‘Obama drama’ and other politicians anxious for a government shutdown without negotiation, to our detriment, the world was watching. Michele Bachmann, a GOP forerunner led a revolt against the debt ceiling being raised. The Congresswoman went as far as to vocalize her want for more tax reductions afforded to the wealthy than they already enjoy. Since last year, Fox News hosts have pushed incredibly hard for tax cuts to be extended permanently to the wealthy — all of which are wealthy themselves.

At one point, members of both parties agreed that Eric Cantor should step aside during the back and forth of the tedious talks.  House Republicans were deemed hostage-takers, while threats of a possible global financial disaster loomed over the public eye — yet they stood obstinately by without consideration of a compromise, as if their way, the new party called the Tea Party, is the only way.

Cutting without revenue is a no-brainer. It’s exceedingly ignorant to feign fiscal responsibility in the midst of a crisis while sticking by principled freshmen GOP partisan standards, none of which so far have given this country credibility to the rest of the world due to no consideration of bringing in revenue.

Chuck Schumer was vocal in his warning of what could take place if this issue was not given compromise. A game of chicken was played out and America lost.

With facts glaring in political faces surrounding the Bush tax cuts, which failed miserably, the right wing cheered on the temporary measure to be given permanence. Tax cuts during the Bush administration did not create jobs as predicted, in fact, his job creation record was abysmal with the Bush administration creating approximately 1,080,000, which totals only 135,000 jobs annually during his 8 year elected tenure. Comparatively, the Clinton administration created created 23 million jobs.

The number one debt monger is and was the Bush tax cuts, which we are still paying for in America — and the beat goes on, with the stock market taking a beating and now our standing with S&P looking more shabby, instead of its exemplary AAA rating. 

Republican desires were given priority, with Medicare, and ‘entitlements’ put on the chopping block, yet the number one ‘entitlements’ are Corporate welfare, tax breaks and loopholes which were afforded to the wealthy in a gift wrapped partisan box. 

Image courtesy of OBRag.org with thanks