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United States Loses S&P AAA Credit Rating

timothy posted more than 3 years ago | from the don't-worry-the-next-19-generations-won't-mind dept.

Government 1239

oxide7 writes with this excerpt from the International Business Times: "The United States lost its top-notch AAA credit rating from Standard & Poor's on Friday in an unprecedented reversal of fortune for the world's largest economy. 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."

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WTF that wasn't supposed to happen!? (-1)

Anonymous Coward | more than 3 years ago | (#37004608)

Thx Pres. Obama !!

Re:WTF that wasn't supposed to happen!? (1, Insightful)

Llian (615902) | more than 3 years ago | (#37004624)

You are an idiot. Thank yourself and every other american who voted for every president since nixon.

Re:WTF that wasn't supposed to happen!? (3, Insightful)

The Master Control P (655590) | more than 3 years ago | (#37004678)

Because Obama was the one who took the debt ceiling hostage in order to force people to accede to his nearly religious-cult-obsession with never raising taxes to pay for anything, ever.

If you're going to thank him sarcastically for something, it should be for teaching the Republicans that hostage-taking works. Enjoy this bullshiat happening again in 6 months. Yes, McConnell outright said that: The debt ceiling is "a hostage worth ransoming."

If today's Republican party were described to someone even 5 years ago, they'd assume you were talking about a cartoon villain, with a tophat and monocle, twirling his moustache as he cackles about the latest despicable thing he did just because he could.

Re:WTF that wasn't supposed to happen!? (-1, Flamebait)

bonch (38532) | more than 3 years ago | (#37004700)

Because Obama was the one who took the debt ceiling hostage in order to force people to accede to his nearly religious-cult-obsession with never raising taxes to pay for anything, ever.

Obama raised the debt to astronomical heights in the first place. That you're so left-of-center that you think not raising taxes is a "religious-cult-obsession" really says something.

Re:WTF that wasn't supposed to happen!? (3, Insightful)

vell0cet (1055494) | more than 3 years ago | (#37004768)

You're ignoring the fact of the economic momentum built up by the previous administrations serious mismanagement.

I like to use this analogy:
If you've got a hole in your roof and your solution is to buy a bucket to catch the rain water. That bucket fills up and then you have to buy another one... and another one... When you're whole house is filled with buckets, that's not the time to say that you're not going to spend money to buy buckets anymore. It's time to say, "it's going to cost a lot to fix the roof but it's something that must be done."

The problem is that Obama tried to get a roofer in but caved into pressure to not pay him enough to fix the problem. So now we've got a huge hole in our roof, no more spending on buckets and water damage being done everywhere.

Re:WTF that wasn't supposed to happen!? (4, Informative)

Dahamma (304068) | more than 3 years ago | (#37004776)

Yes, it's all Obama's fault, the economy was perfect when he took over.

http://en.wikipedia.org/wiki/File:US_Federal_Debt_as_Percent_of_GDP_by_President.jpg [wikipedia.org]

Democrats have been so bad for the US debt! Or maybe the last two years are first time it has risen as a percentage of US GDP under a Democrat since 1975. Still Obama's fault, since he started 2 useless wars... oh, wait, that inflection point seems to be set squarely in his predecessor's term. Personally I'll wait until the end of this term to see how much of Bush's damage he can undo.

Or should I just say "you're so right-of-center you don't need facts and statistics, they just get in the way..."

Re:WTF that wasn't supposed to happen!? (1)

Jah-Wren Ryel (80510) | more than 3 years ago | (#37004926)

I'd like to see a similar chart graphing debt versus control of the house and the senate. Know where I can find one?

It would also be interesting to see debt as % of GDP plotted along with taxes as % of GDP.

Re:WTF that wasn't supposed to happen!? (3, Informative)

thatskinnyguy (1129515) | more than 3 years ago | (#37004936)

That inflection point just so happens to be when the Democrats took both houses of Congress and stopped producing an annual budget.

/Obama/Bush - fixed that for you (0)

Anonymous Coward | more than 3 years ago | (#37004794)

/Obama/Bush - fixed that for you

Re:WTF that wasn't supposed to happen!? (5, Insightful)

The Master Control P (655590) | more than 3 years ago | (#37004812)

Are you sure it was Obama who indebted us?

Are you sure it wasn't Reagan's Star Wars?
Are you sure it wasn't Bush's decision to slash taxes when we were running a surplus for the first time in modern history and on course to pay down the deficit?
Or his decision to not only not impose a war tax to pay for his overseas adventures, but for the first time ever cut taxes during a war?

We are buried in debt that was created almost entirely by Republican administrations, due to Republican policies. Federal taxes are at their lowest point in living memory, federal revenue as a fraction of GDP is 20% below where it was in 1980, and we are facing a deficit that will never be closed unless that circumstance is changed. Taxes go up or our deficit continues to accumulate - your choice.

Re:WTF that wasn't supposed to happen!? (0, Insightful)

Anonymous Coward | more than 3 years ago | (#37004716)

Because Obama was the one who took the debt ceiling hostage in order to force people to accede to his nearly religious-cult-obsession with never raising taxes to pay for anything, ever.

It's only recently that I've seen people get bold enough to field this absurd logic.

Spend and spend and spend on things we don't want, then scream that it's our "nearly religious-cult-obsession" unwillingness to accept tax increases that's to blame.

How about, stop spending what you don't have? God forbid we slow the firehose of outgoing dollars for various programs we don't want or need. But if you say that, then it's, "Oh so you don't want traffic lights? What's wrong with you?" As if that's where the money is going. I've had it with the bullshit political rhetoric, and people just repeating what they heard on Fox News or Jon Stewart.

Stop spending my f'ing FEDERAL tax dollars on crap I don't want, in places I don't live in. That includes other countries AND other states.

Re:WTF that wasn't supposed to happen!? (3, Insightful)

hedwards (940851) | more than 3 years ago | (#37004764)

Because lifting the debt ceiling isn't about spending, it's about paying for money that's already been spent. Which is why you hear folks making those sorts of claims. A good analogy would be back in the 80s when it was common for credit card transactions to be done manually with that device and carbon paper. You'd go in hand the card over and they'd zip zip the machine and you'd be on your way.

What happened with the debt ceiling would be more or less equivalent to your credit card company telling the merchant a bit later that you were actually over your limit and that they'd have to raise it or you'd have to pay off some of your debt or they wouldn't give the merchant the money.

Which is why the folks that were holding the debt ceiling hostage as a preventative measure against spending were so stupid. They could have gotten $4,000bn in cuts had they accepted $100bn in loophole closures, instead the final deal was cuts only and ended up being a little over half what the cuts would otherwise have been.

Re:WTF that wasn't supposed to happen!? (4, Interesting)

The Master Control P (655590) | more than 3 years ago | (#37004870)

I'd be more careful about this "we" you are throwing around so freely.

"We" the people have for many years supported the existence of social security, medicare, public schooling, and other such programs which provide a pale imitation of the social net found in other developed nations.

And what else can it be called but a religious article when you have people like Grover Norquist, famous for saying he wanted to shrink government with the objective of "drowning it in the bathtub," getting congressional Republicans signing pledges that they will never, ever allow any form of revenue increase ever? When Boehner walked out of negotiations because Obama refused to offer a deal consisting of nothing but spending cuts?

What we are seeing here is the long-term Republican strategy of destroying the New Deal and everything that's come since by forcing the US into insolvency.

Re:WTF that wasn't supposed to happen!? (3, Insightful)

Killall -9 Bash (622952) | more than 3 years ago | (#37004912)

Last I checked, congress holds the purse-strings. If the president is LITERALLY spending money without congress' permission, he needs to be impeached. Today.

But that's not what's happening, is it?

Obummer (0)

Anonymous Coward | more than 3 years ago | (#37004618)

Obummer

probably should have been lowered anyway (4, Insightful)

MorderVonAllem (931645) | more than 3 years ago | (#37004620)

Just the fact that we were even thinking about defaulting or raising the debt limit should have lowered our credit rating.

Re:probably should have been lowered anyway (0)

Anonymous Coward | more than 3 years ago | (#37004634)

Just the fact that we were even thinking about defaulting or raising the debt limit should have lowered our credit rating.

Reagan raised the debt ceiling eight times. Nobody even batted an eye.

Re:probably should have been lowered anyway (2)

hashp (68887) | more than 3 years ago | (#37004666)

It's not how much you borrow, it's whether you are seen as trustworthy to repay it on time or not.

Mod parent up. (5, Insightful)

TheLink (130905) | more than 3 years ago | (#37004766)

The real reason was the US politicians were being insane/assholes/idiots about it. Not that the debt ceiling was raised, or had to be raised.

If you just "somehow find the money" to make the interest payments (as you did for how many dozen times), the banks wouldn't give a damn (even if it meant creating more US dollars out of thin air). Because the people working in those banks would just hope that the time you guys finally blow up, they might be safely retired in the Bahamas.

BUT the minute you have a very public discussion about whether you are going to bother to find the money or not, the banks will get worried. And rightfully so.

That's why many around the world were calling the US politicians all sorts of things: irresponsible, reckless, absurd etc.

They can't peacefully farm on the rich dirt by the volcano once the volcano makes crazy noises...

Re:probably should have been lowered anyway (5, Informative)

Dahamma (304068) | more than 3 years ago | (#37004668)

Just the fact that we were even thinking about defaulting or raising the debt limit should have lowered our credit rating.

Reagan raised the debt ceiling eight times. Nobody even batted an eye.

Actually, Reagan raised it 18 times, and Bush II raised it 7. Lack of eye batting mostly true.

Re:probably should have been lowered anyway (1)

Anonymous Coward | more than 3 years ago | (#37004862)

We're talking about, what, a $2.4 trillion increase in the debt limit... the largest in US history? I don't think the world economy cares about the frequency or whodunnit. I think it's the magnitude of the hole we're in and that we've just agreed to make it far, far worse, with no credible intention of fixing it in the near future. And you could've guessed what they'd say to, "But we've formed a bipartisan committee to figure out what's wrong with us!"

"Yeah, blow me. Fix the problem and we'll talk." Just like anyone potential lender would.

I mean, I'm no financial wizard... but I wouldn't lend us a dollar either if I wanted to be able to get it back one day.

Re:probably should have been lowered anyway (4, Insightful)

The Master Control P (655590) | more than 3 years ago | (#37004918)

The money supply inflates exponentially, so yes every debt ceiling raise will tend towards being the biggest ever. Let's see them on a dimensionless scale by dividing by something of equal measure, say GDP.

Dimensional analysis should be required learning in high school :/

Re:probably should have been lowered anyway (4, Insightful)

The Master Control P (655590) | more than 3 years ago | (#37004732)

It's not acceptable if you're an Evil Tax And Spend Democrat tasked with fixing the problem.

It's OK to run a massive deficit, or reduce taxes during a war, or create massive unfunded programs like Medicare D, if you're a Fiscally Responsible Republican however.

That this viewpoint (or at least the first half of it) is unquestioningly repeated by nearly the entire media is the problem. The Republican party's slow descent into insanity began when they realized that the media would unquestioningly repeat absolutely anything they said, no matter how ludicrous or patently false...

They weren't thinking about it though (4, Insightful)

Sycraft-fu (314770) | more than 3 years ago | (#37004646)

I mean for one, these debt limit things always tend to be a "to the wire" affair so nobody takes it that seriously. However the other thing was the executive branch made it clear they wouldn't default on bond payments. That they don't have enough money means they have to choose what not to pay. That could be things like social security payments, and instead pay bond holders which is what they said was likely to happen.

Makes sense too, not only does the US have an obligation to pay its debts and want to maintain its credit, but doing something like that would piss people off and cause them to put pressure on congress to reach a deal.

Really I don't think this downgrade should have happened. While there are quite likely to be other problems for the US (spending cuts, tax increases, slow economy) it does not at all look like default is in the cards. Since bond ratings are supposed to be a rating of how likely that is, the rating seems to be incorrect. My opinion is it is politicking. The S&P people in power wanted a different deal and this is their politicking of it.

Re:They weren't thinking about it though (5, Insightful)

msobkow (48369) | more than 3 years ago | (#37004774)

Given the ever increasing debt load and utter failure to come up with a plan that will even reduce the deficit, much less balance the budget, the US deserves to have it's credit downgraded. Sorry, but you can't keep spending more than you take in without it coming back to bite you -- no matter how self important you are.

Re:They weren't thinking about it though (2)

WarlockD (623872) | more than 3 years ago | (#37004902)

No it should of happened. This is not a CD here, this is long term, 30 year bond debts we are talking about. S&P ain't saying the US is going to die in 30 years, but what they ARE saying that there is uncertainty on where the US is going to be in 30 years or even 10 for that matter. Its not about paying the bills now, its about, in 10 years, will we just be in MORE debt and have a lesser value currency if we keep down this road.

I think they wanted something that said "In 10 years we will have x amount off our spending/debt" but we didn't do that. Instead we came up with a half ass plan, skipped off for a month of vacation, and didn't pay the bill to the FAA and loose MORE money in not getting airfare taxes.

Seriously, I think going down a small notch was more of a conservative decision. I just hope congress will do something instead of blaming each other.

Re:probably should have been lowered anyway (1)

hedwards (940851) | more than 3 years ago | (#37004778)

Indeed, but not just that, but the fact that the GOP was able to push it to the brink of default that was almost certainly the last straw. As long as the GOP can hold the budget hostage and refuse any sort of reform there's a possibility of default. Unfortunately, these budget bills have to originate in the house, where the GOP has a majority.

So does anyone really think... (2)

Lanteran (1883836) | more than 3 years ago | (#37004630)

...that this could end the culture of borrowing the US has?

Re:So does anyone really think... (0)

Anonymous Coward | more than 3 years ago | (#37004640)

...that this could end the culture of borrowing the US has?

Oh no! Whatever shall we do now that we cannot use the money of others to buy stuff for ourself anymore!

China (1)

G3ckoG33k (647276) | more than 3 years ago | (#37004670)

Do like the Greeks, have the richer and harder working guys feed you, for the Greeks it is EU. In the case of the US it will be China.

That would make an interesting poll. How many months since you bought anything "Made in USA".

Re:China (0)

Anonymous Coward | more than 3 years ago | (#37004756)

My govt bought a few warplanes with my tax money, all made in USA.

Re:So does anyone really think... (0)

Anonymous Coward | more than 3 years ago | (#37004872)

Oh no! Whatever shall we do now that we cannot use the money of others to buy stuff for ourself anymore!

Sell the kids!

Re:So does anyone really think... (0)

Anonymous Coward | more than 3 years ago | (#37004662)

By the time this administration is done, the federal spending will be >50% from borrowing. It's already about 43%.

Re:So does anyone really think... (1)

jwijnands (2313022) | more than 3 years ago | (#37004738)

No. Even the recession of a few years ago only put a dent in that.

Re:So does anyone really think... (1)

Lanteran (1883836) | more than 3 years ago | (#37004746)

True, but reduction in the US's credit rating is somewhat more powerful than a recession imo.

Re:So does anyone really think... (2, Insightful)

hedwards (940851) | more than 3 years ago | (#37004790)

I doubt it, as long as the GOP refuses to allow taxes to rise high enough to pay for essential spending and pay off our debts it's not likely to happen.

Re:So does anyone really think... (0)

Anonymous Coward | more than 3 years ago | (#37004896)

I've already seen responses from Republicans calling Obama incompetent while not mentioning that S&P said one of the main reasons was due to the lack of increased revenue.

I expect the Dems to beat their drums and scream about raising taxes using this as their standard though. Who knows? Maybe they'll finally raise some fucking taxes or close some loopholes for the first time in, what, 12 years?

Re:So does anyone really think... (1)

iamhassi (659463) | more than 3 years ago | (#37004818)

Does this mean people making $60,000 a year won't be buying $500,000 houses anymore?

Holy sheeple Batman! (1)

atari2600a (1892574) | more than 3 years ago | (#37004632)

With a fractional reserve banking system these highs & lows are an inherit trait. Either we accept them & roll the dice for riding it out or economic collapse, or we abolish the central bank for a third time. I for one think an entire society built on inherit debt is but a ticking time-bomb, set off purely by our own fear.

Re:Holy sheeple Batman! (1)

atari2600a (1892574) | more than 3 years ago | (#37004654)

Also I know whenever I bring this up on slashdot a flame-war between libertarians, liberals, socialists, communists,. capitalist conservatives, etc but I'm afraid I can't ride this one tonight, I have work in the morning to pay for repairs for my Honda Cub I bought with existing non-plastic paper money that technically has no value but fuck it at least I'm not in debt.

Re:Holy sheeple Batman! (0)

Anonymous Coward | more than 3 years ago | (#37004692)

know the feeling. t-minus 35 days till I can no longer claim I'm a Debt free American. at least the student loan is locked at 3.5 percent. wonder if inflation will be more then 3.5 percent in 2 and a half years. so messed up that out country rewards consumers and not savers. hee hee (insert sociopath laughter)

Re:Holy sheeple Batman! (0)

Anonymous Coward | more than 3 years ago | (#37004748)

As Gerald Celente says:

The dollar isn't worth the digital paper it's not printed on

Two things... (2, Insightful)

Anonymous Coward | more than 3 years ago | (#37004638)

I'm sure retards are going to blame Obama, while ignoring the Republican asshattery that got everyone in this mess in the first place

Two, who the fuck cares about ratings agencys? Werent they the ones putting AAA on CDO's? Shouldnt we burn those fuckers to the ground as the turds they are?

Re:Two things... (1, Informative)

devleopard (317515) | more than 3 years ago | (#37004684)

Credit rating is ideologically ignorant - it's a matter of high debt and inability to meet payments.

The debt comes from massive tax cuts coupled with massive spending increases. In this regard Bush and Obama were a perfect tag team.

The inability to pay back debt (or the perception thereof) comes from the crazed grandstanding that happened by both parties.

However, the idea that blaming the person in charge, who pushed a program of new programs in an age when revenues were low, is pretty much common sense. Nice job of trying to cut it off with such eloquent adjectives, however.

Re:Two things... (0)

Anonymous Coward | more than 3 years ago | (#37004784)

Who's fault is it revenues are low, dickhead? Oh that's right, that would be Republicans! Who started two wars for no good reason? Republicans! Who enabled the Tea Party? REPUBLICANS!

Democrats are spineless. Republicans are just plain evil

Re:Two things... (1)

devleopard (317515) | more than 3 years ago | (#37004820)

Again, such impressive descriptive adjectives.

CostOfWar.com: BOTH wars cost $1.1 trillion

According to the CBO, the cost of Obamacare alone: $2 trillion

I can't discount that Republicans have done some dumb things financially. They poked some pretty big holes in our wall of financial stability. What Obama (and the Democratic controlled Congress that enabled him) did was shove a stick of dynamite in that hole, and telling everyone, "Don't worry, the fuse is long enough, it'll never explode."

Re:Two things... (1)

WarlockD (623872) | more than 3 years ago | (#37004942)

Honestly, I think its more about legacy. Now a days a president has only one, solid good chance to have a legacy. Unless there is a major tragic event involved, no one really remembers a president. (Carter, Clinton, Ford come to mind). From day one, Obama had one shot to put though a health care bill for everyone because it was probery going to be the only time they will get that chance.

I like some of the protections in the new health care. I don't have to worry about being kicked out of my plan because I have diabetes, my mon can get her cancer treatment without worrying about it either. Also, while I would of preferred a public option, these exchanges just might work (republican idea). If not we really see what scumbags the insurance agency's are:P

Re:Two things... (1)

Arlet (29997) | more than 3 years ago | (#37004958)

A lot of that money gets recycled back into the economy, so it doesn't equate a $3t loss. It just means a different kind of distribution than before.

More worrisome is the US trade deficit that's been running continuously for more than 3 decades. That is money that leaves the country, and doesn't come back. The trade deficit isn't caused by politicians, but by ordinary Americans consuming more stuff than they produce.

Re:Two things... (1)

the linux geek (799780) | more than 3 years ago | (#37004914)

George Bush got us into the Libya war? Damned industrious of him...

Re:Two things... (3, Interesting)

rmstar (114746) | more than 3 years ago | (#37004888)

Credit rating is ideologically ignorant - it's a matter of high debt and inability to meet payments.

No, in fact it is ideologically very non-ignorant, as it has an ideology that it is trying to push on the world. c.f. Krugmans commentary [nytimes.com] on the issue.

It is also arguably irrelevant in many situations. You can compare us 10y bond yields [bloomberg.com] with, I don't know, greece's 10y bond yield or a bunch of orthers [wsj.com] . The world is not about to end on the US. It is quite possible that S&P have just made fools of themselves.

Re:Two things... (-1)

Anonymous Coward | more than 3 years ago | (#37004686)

I'm sure retards are going to blame Obama, while ignoring the Republican asshattery that got everyone in this mess in the first place

Two, who the fuck cares about ratings agencys? Werent they the ones putting AAA on CDO's? Shouldnt we burn those fuckers to the ground as the turds they are?

It doesn't matter *what* Obama and the Treasury Dept says. Foreign investors will simply decline to buy Treasuries at AAA interest rates, and foreign lenders will not loan the US money at the AAA rates.

Obama can't force foreign countries like China to buy our paper or loan us money at the rates *we* want. Obama can't force foreign investors to do anything. Foreign investors are no longer listening to what Obama, the Fed, and the Treasury Dept says.

Contrary to the shrill screams from the Left, the TEA Party had nothing to do with the downrating. This has been coming for decades due to the insane spending policies of BOTH political parties.

It has simply reached it's conclusion in a downgrade (maybe only the first in a series) now because of the accelerated "spending-on-steroids " that has occurred since Bush's TARP and entitlement expansion, and then followed with Obama and the Democrats taking power and enacting huge spending increases such as the Stimulus and Obamacare.

The downgrade was locked in after it was apparent to investors that Washington refused to enact any serious immediate spending cuts with the debt ceiling deal, despite the intense efforts of the TEA Party to pressure for larger and more immediate cuts in spending, along with measures to restrict future spending.

Blaming the TEA Party is nothing but political distraction, as the entire TEA Party movement was founded as a reaction to out-of-control government spending, high taxation, and massive growth in the size and scope of government.

At least Jimmy Carter will no longer have to wear the stone around his neck of being the worst POTUS in US History.

Re:Two things... (0)

Anonymous Coward | more than 3 years ago | (#37004772)

What is TEA an acronym for?

Or do you just feel compelled to scream it every time?

Re:Two things... (0)

Anonymous Coward | more than 3 years ago | (#37004804)

What is TEA an acronym for?

Taxed Enough Already

As in the government already confiscates enough revenue, the problem is too much spending.

Re:Two things... (1)

hedwards (940851) | more than 3 years ago | (#37004816)

Doubtful, regardless of what the ratings agencies say, US debt is still the safest in the world. There's nothing that offers as much interest for so little risk, even now we're not going to have any trouble paying the debt back, which is ultimately the main concern.

If there was going to be a problem it would have shown up in the bond market by now. That's not to say that it's impossible, but it's not just a matter of our bonds, it's all the other bonds that people could by. If we were anywhere near the precipice at this point you'd see massive repricing in all sectors.

Re:Two things... (0)

Anonymous Coward | more than 3 years ago | (#37004890)

Doubtful, regardless of what the ratings agencies say, US debt is still the safest in the world.

Oh, it's not like they'll completely stop buying US Treasuries, etc. It's just that they will demand higher interest rates be paid on them, which will cost the entire US economy and every individual seeking credit.

This was just a slap (albeit an expensive-for-us slap). The economic bullet to the head (refusal to loan the US money at all or only under insane interest rates) won't occur unless it becomes apparent that the slap still didn't wake the US leadership up and convince them to actually reduce spending and debt in meaningful amounts and timeframes.

Re:Two things... (1, Informative)

bonch (38532) | more than 3 years ago | (#37004712)

I'm sure retards are going to blame Obama, while ignoring the Republican asshattery that got everyone in this mess in the first place

Obama has raised the national debt by over three trillion dollars. He added more debt in the first 19 months of his presidency than all presidents from Washington through Reagan combined. If Obama supporters are really going to try to pin everything on Republicans, they're going to be in for a big disappointment in next year's election.

Re:Two things... (5, Insightful)

im_thatoneguy (819432) | more than 3 years ago | (#37004810)

"Raising the national debt" is a play on words that doesn't actually reflect Obama's actions. "Raising" makes it sound like he spent an extra $3T. What happened was our income dropped substantially (and we spent extra on stimulus).

Both Democrats and Republicans agree that the solution to our current fiscal crisis is to boost GDP so that we can increase revenue back to previous levels. If we had 1999 revenues in 2009 we wouldn't be "raising the national debt" even with present spending levels.

Even including Obama since 1972 our spending as a % of GDP has been decreasing. If the stimulus worked [Insert Debate] then arguably even the "spending" Obama had saved even more in revenue. The Bailout has almost completely paid itself off and is expected to actually return a profit. Did the stimulus pay for itself? Maybe. But one thing we do know thanks to the CBO is that the 2003 Tax Cuts are responsible for a huge portion of our deficit. Obama tried to end those Tax Cuts--he was blocked by the Minority Republicans.

Obama has tried to reduce the deficit, he even proposed a larger spending cut than the GOP--but the GOP has lost their fucking minds trying to please a tiny fraction of the US population who is completely unwilling to raise taxes or close loop holes. They rejected trillions in spending cuts because there were also some revenue increases to go along.

This is the first time in history that we've cut taxes during a War. Not just one war, 2 wars. If we're supposed to look to business to learn how to operate an organization then we need to be realistic and acknowledge that "sometimes you have to raise prices to not go bankrupt". We continue to vote and poll that we like our government services. That's fine. There is nothing wrong with liking social security and medicare etc. But now we have to be adults and pay what it costs to run those organizations.

Re:Two things... (0)

Anonymous Coward | more than 3 years ago | (#37004822)

Wrong; BUSH raised the debt by three trillion. Or do you forget the two wars Bush got us into?

  That being said, blame is useful only for figuring out who gets sent to prison longer than the other - and frankly since I don't see even Scooter Libby going to jail, that's kind of a moot point, isn't it?

Re:Two things... (0)

devleopard (317515) | more than 3 years ago | (#37004886)

Actually the cost of the 2 wars combined is about $1.1 trillion. Also, the last I checked, Obama was the commander in chief - he has ultimate authority as to whether or not those troops are still there. More energy has been placed on repealing Don't Ask Don't Tell than removing our soldiers from Iraq and Afghanistan. The order was given to kill, not capture, Bin Laden. The wars are the favorite flame fodder of those who are opposed to Bush, and probably rightfully so. To that end, Obama's actions have shown he's pretty much on board with all of it - very little action there.

Obamacare alone is estimated to have a price tag of $2 trillion.

Re:Two things... (1)

hedwards (940851) | more than 3 years ago | (#37004840)

The economy was in free fall and those stimulus programs more or less arrested the crash. You might remember that the economy more or less crashed in the couple months leading up to Obama's election. I'm not sure how you can possibly blame Obama for a crash that was started by the other parties incompetent fiscal policy decisions.

Say what you will, but arguing that there was any alternative is naive to say the least. This isn't like Bush who turned a $6tn projected surplus into $5tn of additional debt in his 8 years in office. It's really easy to blame Obama when it's the GOP that fucked things up in the first place.

Re:Two things... (0)

Anonymous Coward | more than 3 years ago | (#37004884)

You are right, it was the democrat majority held house and senate and a weak republican president that was sitting on the seats saying yes to stimulus that caused a good portion of the problem. Then it was followed up with a 1-2 punch of drunken sailor spending by the dems for the next two years.

Re:Two things... (1)

devleopard (317515) | more than 3 years ago | (#37004960)

So we accept that Bush spent a bunch of money, and that Obama inherited a mess. That's pretty much a fact.

Obamacare? GM buyout? Cash for Clunkers? You don't fix a money problem by creating new programs to spend more. You fix the problems that are there first...

Under Obama, the major accomplishment in the military is what? Ordering all the troops home? No .. repealing Don't Ask Don't Tell.

The Bush administration spent more on education than the Iraq war. Maybe he should be criticized for that, no?

Remember that the stimulus package.. the failed one ... cost more than the Iraq war under Bush (2 years vs. 6 years, no less)

Obama did not raise the debt by $3T (4, Interesting)

rwade (131726) | more than 3 years ago | (#37004952)

Obama has raised the national debt by over three trillion dollars. He added more debt in the first 19 months of his presidency than all presidents from Washington through Reagan combined. If Obama supporters are really going to try to pin everything on Republicans, they're going to be in for a big disappointment in next year's election.

First of all, I don't know where you're getting "three trillion dollars" from. Would be awesome if you could, y'know, provide the source for this data.

Second of all, the President didn't increase the debt single-handedly. You cannot point out any amount of programs that he himself pushed for that led to a deficit of $3 trillion since his first budget (the 2010 budget, since the 2009 budget was Bush's).

Thirdly, the deficit would have been greatly reduced if not for the continued impact of the 2001/2003 tax cuts for the wealthy instituted by President Bush and his congress. Obama is opposed to this and claimed to try to get rid of these (although he didn't, really, in my opinion try that hard. He sold out, in my opinion). Anyway, this would have reduced the deficit.

The bottom line -- you can't blame Obama for an addition to the debt of three trillion dollars. Did he preside over a three trillion dollar increase in the debt? Yes....well, maybe -- I'd still like to see the math on this. But George Bush presided over the worst terrorist attack the United States has suffered. Does that mean that he caused it? No -- any number of things led to the attacks; he was just the guy in the seat for when it happened. Obama is the guy in the seat during the period the debt increased.

One other note -- the President doesn't get to choose what gets funded and what doesn't get funded. You know that there are programs that he wants gone, spending that he wants gone that the republicans insist on funding.

Re:Two things... (1)

devleopard (317515) | more than 3 years ago | (#37004722)

Credit ratings: have you ever bought a car? A house? (If not, yell up to your kitchen and ask mom about what credit means when she got the mortgage)

The US government operates at a deficit. All those things we like to scream about on Slashdot - healthcare, the Shuttles, broadband to the last mile, etc, etc.. has to be paid for. Someone, somewhere, gets cut a check, and cashes that check. Where do you think that money comes from if we spend more than we take in? The ability to borrow is key .. and we can only see if those who loan the money ignore what the S&P has to say (in the same way your mom's bank can ignore her FICO if they so choose)

Re:Two things... (0)

Anonymous Coward | more than 3 years ago | (#37004908)

The money is created by banks who automatically attach debt to it. Why can't we have the govt create money, and not attach debt to it? As long as we keep innovating things others want and advancing knowledge, which raises standard of living, the currency will remain strong. Example: Japan.

Re:Two things... (2)

Moby Cock (771358) | more than 3 years ago | (#37004864)

Ratings are important to many pension funds and the like. Lots of them are precluded, by charter, from obtaining or holding bonds that are not AAA rated. So, the downgrade of US T-Bills could 'lock out' some potential markets.

Not that I think it will make much difference, however...

Re:Two things... (1)

jpapon (1877296) | more than 3 years ago | (#37004934)

Funny how that means those pensions could buy packaged junk mortgages, which S&P rated AAA, but not US treasuries. Saying US treasuries are unsafe is pointless, since the US is still the worlds reserve currency... If US bonds become worthless then so does basically everything else. So it's pointless to downgrade them; while they may not be as safe as they used to be, the valuation of everything else depends on them (ie nothing is safe).

Re:Two things... (2)

stms (1132653) | more than 3 years ago | (#37004910)

I'm sure retards are going to blame Obama, while ignoring the Republican asshattery that got everyone in this mess in the first place

Two, who the fuck cares about ratings agencys? Werent they the ones putting AAA on CDO's? Shouldnt we burn those fuckers to the ground as the turds they are?

Our countries problems are just as much Obama's fault now as they were Bush's fault a few years ago. Get off your high horse they're both the problem. By taking sides your just empowering both of them to continue the same asshattery.

At this rate... (0)

Anonymous Coward | more than 3 years ago | (#37004642)

At this rate, I will have a better credit score than our government, at least i can pay my bills on time.

Raising rates (0)

Anonymous Coward | more than 3 years ago | (#37004648)

What this is, is the private sector telling the US government to raise interest rates.

Downgrading doesn't really matter (1, Insightful)

GodfatherofSoul (174979) | more than 3 years ago | (#37004660)

Right, teabaggers? Of course, this is the same S&P that told us that all those bullshit mortgage-backed securities were legit.

Re:Downgrading doesn't really matter (-1, Flamebait)

bonch (38532) | more than 3 years ago | (#37004726)

Right, teabaggers?

You actually use the word "teabaggers?" Are you 12?

Lots of lashing out and gnashing-of-teeth from Obama supporters tonight. Attack, attack, attack. It's not going to change the outcome of 2012.

Re:Downgrading doesn't really matter (0)

Anonymous Coward | more than 3 years ago | (#37004844)

For the damage they helped contribute to society i'd you'r the one who behaves like 12. The tea party, the republican "conservatives" and fox's friends deserv every scrutiny and mockery in its full entirety. They'r nothing but a facade more reminiscent of a public lobbyists gathering for republicans pretending to be the common American on their corporate Fox News facade.

And you come here all mighty and up high in your white tall superior morality horsey after failling to constantly denying it wasn't a republican (G.W.Bush with Cheney and its lackeys) that didn't throw the country into disgrace and now still keep doing nothing more than be a nuisance and blocking every solution in order to stall any attempt to solve the problems mostly you republicans created (and hypocriticly deny like a sociopath playing games) so you can once again present yourselves as the saviors. Foxes guarding the hens house is what you are.

You deserve to be called, mocked, scroned, trashed and classifiend way more harshly than just teabaggers. You are criminals, thugs and crooks who want no efficient solution, all you want is impeed, block, constrain, while blaming the person next to it for its actions.

Sociopathic hypocrite teabagger scum with the nerve of portraying themselves as the victim while getting all the tax breaks and welfare for their selfish benefit.

Re:Downgrading doesn't really matter (1)

CodeBuster (516420) | more than 3 years ago | (#37004938)

Lots of lashing out and gnashing-of-teeth from Obama supporters tonight

Anything which reduces spending or even just slows the growth of government, with the possible exception of defense, annoys those on the left because it weakens the bonds of the average person's dependency on the state and by extension their (i.e. the politicos) power over them.

Re:Can someone explain (3, Insightful)

thegarbz (1787294) | more than 3 years ago | (#37004754)

I only have a background in economics 101 and I'm not an investment banker, but could someone tell me how the worlds biggest borrower, the most in debt country in the world, a country so in debt that we're talking about grandchildren repaying the loans, and a country which seems to have for the last 50 years shown only a steady increase in spending and debt manages to have a AAA credit rating anyway?

I thought the purpose of these credit ratings were to determine what is a good investment, with AAA being safe, but how is an economy which has never repaid and only ever printed money a safe investment?

Also why is it that for the past 2 years people have been steadily divesting from the American economy (which can be seen in the fall of the USD vs all other currencies) yet it is only NOW that some ratings agency (which also caused much of the financial crisis to begin with) actually decides to reduce the credit rating, and even then only to AA+?

Re:Can someone explain (0)

Anonymous Coward | more than 3 years ago | (#37004830)

Because this country has also been the primary driver of innovation and increases in standard of living, which matter more than debt. Debt is a tool of bankers used to emotionally manipulate people to such a degree that they forget to ask why bankers should have an exclusive, divine right to create money and automatically attach debt to it, and charge interest on top of that. What bankers are most afraid of is that ppl will realize we can elect officials to create debt-free money and use it to provide us with a basic income so we can unleash our creativity and innovate without the need for the hierarchies and middle managers and the sales forces of business. In this age of the internet (a creation of govt), communication is orders of magnitude easier than ever before. Let's use the technology of money creation to benefit us, to empower individuals, instead of corporations that are sitting on trillions!

Re:Can someone explain (1)

Arlet (29997) | more than 3 years ago | (#37004898)

they forget to ask why bankers should have an exclusive, divine right to create money and automatically attach debt to it

They don't. If you have some money, you are free to loan it to your neighbor to start a new company in his garage. You can even charge him interest for it. Now, if you happen to have a supply trading company yourself, and your neighbor uses some of that borrowed money to buy your supplies, you can loan the same money again. Presto, you've created money!

Re:Can someone explain (5, Insightful)

tftp (111690) | more than 3 years ago | (#37004882)

how is an economy which has never repaid and only ever printed money a safe investment?

The USA repays the borrowed money, with interest, all the time. But the volume of the offering grows. It's not a concern until the point where you start suspecting that the country won't be able to service its debt. In other words, your one-year T-bills mature but the government says "fsck you, come later."

That point was reached in several ways. First, the very discussion of default undermines the reliability of country's debt. But then the amount of outstanding debt also makes it possible that the country will either physically run out of money to pay interest and buy matured bonds back, or it prints so much paper money that the profit of those bonds becomes negative, or does something else equally displeasing. The US debt stops being a safe store of value. It wasn't for about a decade already, but events like that serve as excuses for policy makers of countries to reevaluate the allocation of their currency reserves without being crucified.

Also why is it that for the past 2 years people have been steadily divesting from the American economy (which can be seen in the fall of the USD vs all other currencies)

The USD loses to other currencies not because "people are divesting" but because its value drops, and that happens because the printing press works day and night. For most of 2011 the US government borrows money from Federal Reserve which makes it out of thin air. When dollars are created at the rate of a few billion per day, why anyone is surprised that they get diluted?

Besides, most of investments in the US economy are done not by rich foreigners but by mutual funds and the like. This money remains in the system. If you take the money out of the market there will be excess of stock without buyers, and that will result in a serious crash of the stock market. That hasn't been observed. The US economy flounders because the business climate is bad, taxes are high, future is uncertain, labor is very expensive, and whatever you do or don't do you get sued. Can you open a small business and sell goods to China? Chinese can do that and sell their goods to the USA.

Re:Can someone explain (1)

daath93 (1356187) | more than 3 years ago | (#37004916)

America has the most external debt of any country but is far from the worst borrower. As a % of gross GDP our debt isnt even in the top 30. All of Europe leads us in debt compared to GDP, which is proof socialism doesnt fucking work.

Re:Downgrading doesn't really matter (0)

Anonymous Coward | more than 3 years ago | (#37004924)

Down-graded or not, they will still be generating their extra-credit$.

These rating companies (1)

xnpu (963139) | more than 3 years ago | (#37004664)

Regardless of their rating being just or not - isn't it "interesting" how much power these few rating companies have?

They Have No Power (0)

Anonymous Coward | more than 3 years ago | (#37004836)

Anyone can choose to listen or not listen to them.

It's like challenging why a guy with lots of Twitter followers deserves to have so many.

But if there are a lot of people listening to them, it's because they believe in their track record.

Think about it - if someone came along giving me better advice, why wouldn't I switch to him?

That's ironic or absurd (5, Insightful)

dens (98172) | more than 3 years ago | (#37004676)

After all, if the ratings agencies had done their jobs a few years ago, we wouldn't be in a lot of this mess.

Re:That's ironic or absurd (1, Insightful)

jwijnands (2313022) | more than 3 years ago | (#37004730)

Yeah, it's all their fault. Any excuse for an American not to use common sense, right?

S&P is not a trustworthy rating agency (1)

decora (1710862) | more than 3 years ago | (#37004680)

and neither are Moody's or Fitch.

If you read the books about the Synethic CDO industry, you will realize that S&P and Moody's are elaborate frauds.

Re:S&P is not a trustworthy rating agency (1)

Anonymous Coward | more than 3 years ago | (#37004744)

Of course those rating agencies are not trustworthy, the truth is that the rating for US should be much lower than AA+. People are right that it is the ability and credibility of the debtor to repaid its debt that matters. However, the SIZE of the debt is important too especially when it is LARGE compare to the annual revenue that the debtor can possibly obtain through taxation.

Re:S&P is not a trustworthy rating agency (1)

BeShaMo (996745) | more than 3 years ago | (#37004780)

That is very very true. However if this makes people face the fact that the direction the US economy has going for the last 10 years is not healthy, then I'd say they have finally served their purpose.

Re:S&P is not a trustworthy rating agency (2)

Alex Belits (437) | more than 3 years ago | (#37004948)

last 10 years

25-30 years of "hey, doing stuff is for poor people!". 60 if you count the whole post-WWII "let's just print shitloads of money because foreigners use them". 90 if you count financial industry pretending to be the economy. And I can't say that things before that were in any way healthy, either.

Re:S&P is not a trustworthy rating agency (1)

CodeBuster (516420) | more than 3 years ago | (#37004880)

Nobody forces you to believe their ratings; You're free to draw your own conclusions and trade (or not) accordingly. S&P and Moody's offer their opinion concerning the quality of an investment, but ultimately that's all it is; an opinion. This is fraud how? Remember what Warren Buffet, Charlie Munger and other value greats have always advised: avoid investments in businesses that you don't understand.

EXCELLENT news (3, Insightful)

Anonymous Coward | more than 3 years ago | (#37004694)

I hope this will drive into the thick skulls of many americans that the lawyeristic infested, paper based economy is long gone and USA needs to GET BACK TO MAKE THINGS and CUT THE LEGALESE MORASS that thas resulted in too much copyright of basic ideas, red tape for any f...ing simple thing and so on...

Shit ! I start sounding like them populists, but it is jus THE HARD FACTS...

Welcome to the brave new world people...

Did the US government ask for this? (1)

Teunis (678244) | more than 3 years ago | (#37004734)

The Canadian government did, back when they tried to make the country's debt into a bigger emergency than it was.
I wonder if the US did?

No surprise - they said they would (1)

Sarusa (104047) | more than 3 years ago | (#37004742)

And they're right. This debt ceiling deal did absolutely nothing to deal with the US's budget problems (except for 'Ohshi we need money to pay the rent this week, dude! Call your mom.') It's smoke and mirrors on imaginary future savings - one more way in which California blazes the way for the nation. The other rating agencies that are keeping the AAA are indulging in the same sort of wishful thinking that rated junk mortgages bundles AAA. S&P did too, maybe they learned.

At least they did the administration a favor and waited till Friday long after market close to announce it.

Easy solution (2, Insightful)

ErikZ (55491) | more than 3 years ago | (#37004758)

You don't have to worry about your borrowing costs if you stop borrowing.

Time to start cutting Federal programs we can no longer afford.

Income went down 15.2% in 2009 for Americans. Unless you happen to be taxing the other 85% of the people, your taxes will be going down also.

And unless income bounced back up 115% in 2010, you won't be making enough in taxes to cover your existing programs.

Will any investors care? (2, Insightful)

mentil (1748130) | more than 3 years ago | (#37004826)

How many large entities who regularly invest $billions in bonds or other debt actually look up the grade rating in S&P's investment index when deciding whether or not to buy debt from the U.S. Government? It's not like the U.S.A. is some obscure Elbonia country where your average economist would have to look up what that country's assets and liabilities are, it has an economy larger than the 7 next-richest countries combined and any investor worth his salt has these figures memorized for the U.S.A.

The reasoning behind the downgrade is of much larger concern to investors -- that the national debt to GDP ratio keeps increasing quickly, and the vast majority of federal government is strongly opposed to either reducing spending or increasing taxes.

I see this as the financial equivalent to moving the Doomsday Clock one minute forward.

This is s political conservative tactic (0)

Zombie Ryushu (803103) | more than 3 years ago | (#37004828)

This is sorta the result of nearly thirty years of political conservatism's push. You have to realize a few things. Much of this behavior of US Conservatives came from the civil rights movement. It really boils down to the fact they don't like what the US has become. So they in the leadership are doing everything they can to drive the US into a ditch. The white christian supremacist world they knew of is gone. That is why this is happening. If they can't own the US they will cry and scream about the evils of 'government' and 'liberty'. even when it is a complete lie.

S&P Report (3, Informative)

Warlord88 (1065794) | more than 3 years ago | (#37004850)

Link to the S&P report [standardandpoors.com] which contains their rationale for downgrading, future outlook, etc.

One Thing We Can All Agree On.... (1)

Caraig (186934) | more than 3 years ago | (#37004866)

I guess S&P didn't like the 'grand bargain' either.

I smell an investigation (1)

sjames (1099) | more than 3 years ago | (#37004876)

NOW the DOJ can feel free to investigate the ratings agencies that gave those CDOs a AAA rating. Or at least S&P

So, what exactly does this mean for the citizens? (4, Interesting)

copb.phoenix (1976866) | more than 3 years ago | (#37004946)

What exactly does this mean for the citizens of the United States of America?

Out here in Middle of Nowhere, West Virginia, the poverty margin is 80% of all households, and it only rises as the economy gets worse. For a quick comparison, in Clinton's era it was "only" about 17% of all households. No jobs, no hope for the government, shops keep closing because they can't make enough to stay open... So what's the next thing those disconnected people in Washington are going to do to Main Street?

Wow, just... wow (1)

rsilvergun (571051) | more than 3 years ago | (#37004954)

Make sense though. Apple computer has more in the bank than our Gov't. Unless Americans wise up and grow enough balls to start taking back the money they themselves earned from the super rich that hoard it, our economy is just going to tank and tank and tank. There's 3 types of people in America right now: Socialists, super rich, and rubes. Jesus people, wake up. There's a class war on, and you don't even know you're fighting!
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