By Josh Sager
Republicans and Tea Party supporters learned a very important lesson this week: The problem with being willing to take hostages is that sometimes, you accidentally shoot them. While the wound inflicted on the USA this week is only superficial, not only does it still sting, but it was entirely avoidable. Standard and Poors, one of the major credit rating agencies has decided to downgrade the US rating from AAA to AA+.
In recent weeks, the Republicans manufactured a massive crisis over the increasing of the debt ceiling so as to force massive cuts in line with their ideology. In the past, the increase of the debt ceiling has been an uncontroversial, housecleaning, measure in the legislature for two reasons: The first reason is that the increase of the debt ceiling does not increase spending but rather an authorization for payment of expenditures already made. The second reason was that no politician was stupid or ignorant enough to try to stop the increase and destroy the full faith and credit of the USA; politicians (such as Obama) would vote against the majority while increasing the debt ceiling as a protest to how the government is spending, but they knew that the increase would pass.
Enter the Tea Party and radical Republicans, who are a perfect storm of extreme, stupid, and crazy while being completely ignorant of economic theory. Finally we had just what we needed to cure the economy: A bunch of crazy new politicians, who are ideologically opposed to a functioning government, were elected into government (Not hypocritical at all). These freshmen politicians used the tried and true tactic of threatening to blow something vital up if they don't get everything that they want immediately. Unfortunately, as is common with extremists, they didn't take into account the larger effects of their actions on society: Unsurprisingly, when the people running a country threaten to blow up the economy of said country, it makes the people invested in that country a little nervous.
S&P's credit rating is an evaluation of the stability of an entity's currency combined with their ability and willingness to pay; essentially, are they willing and able to pay back loans that are given to them. The debt ceiling crisis was wholly engineered by the right wing, not a genuine crisis like the housing or bank crises. In their statement, the S&P analysts said that they took into account the fact that an extreme segment of the government is risking a crash of the economy if they don't get what they want; a factor that seriously degrades our stability as an investment? Political insanity is a perfectly rational reason to raise the risk level in a country because it casts doubt on the ability of the country to make good economic choices.
This entire situation absolutely disgusts me. The right wing not only got what they want in terms of the debt ceiling bill, but they also were incompetent enough to destroy our credit rating in the process. This is the first time in history that the full faith and credit of the USA has been brought into question; not even during the great depression did we default.
A group of insane right wingers have managed to cause historic harm to the recovering economy while the Democrats let them. I only hope that three things result from this awful and unnecessary situation:
- The damage to the economy will be limited to a small increase in bond interest rates, which will be expensive, but not fatal to our recovery.
- The Republicans are brought to task over their recklessness. They are squarely to blame for the first credit downgrade in US history and hopefully they will suffer for it in the next election.
- The Democrats will learn that you can't negotiate with political hostage takers and terrorists because not only will they come back for more, but their actions often harm the hostage even if they are appeased.
The Sarcastic Liberal
THE DEBT CEILING DEBATE