Donate and feel great
Posted on 08/06/2011 8:26:43 AM PDT by markomalley
Standard & Poor's laments the possibility cuts to entitlement programs won't materialize and the decreasing likelihood of new tax revenues.
The decision by Standard & Poor's to downgrade the U.S. credit rating to "AA+" at once laments the possibility that cuts to entitlement programs will not materialize and the decreasing likelihood of new tax revenues. But it appears to give more weight to the need for more spending cuts, as it warns that a further credit rating downgrade is in the cards if the U.S. does not trim spending.
In contrast, while the report indicates that new tax revenues would help mitigate the debt crisis, failing to find these revenues does not immediately put the U.S. at risk of another downgrade.
Specifically, the report warns directly that a further downgrade to "AA" status could occur within the next two years if there is "less reduction in spending" than what was agreed in the debt ceiling agreement. S&P said one factor that could lead to this second downgrade is if the minimum $1.2 trillion in spending cuts under the debt ceiling agreement does not occur.
But S&P sees the continuation of the Bush tax cuts in 2001 and 2003 as something that could still allow the U.S. to maintain its new "AA+" rating.
While this difference would seem to put a greater emphasis on spending cuts, the report more broadly seems to value both spending cuts and tax revenues as a way out of the debt crisis. S&P said it takes no position on the "mix of spending and revenue measures" needed to put the U.S. back on a path to its historic "AAA" rating, a sign that it believes both are needed in some measure.
It also laments Congress's failure to find a way forward on either prescription as part of the debt ceiling agreement.
"It appears that for now, new revenues have dropped down on the menu of policy options," the report said. "In addition, the plan envisions only minor policy changes on Medicare and little change in other entitlements, the containment of which we and most other independent observers regard as key to long-term fiscal sustainability."
While Democrat and Republican leaders on Friday night argued that the S&P report shows the need for more taxes and more cuts, respectively, the report pointed out the benefits of both. The report's "base case scenario" assumes that a minimum of $2.1 trillion in spending cuts are made as part of the debt ceiling agreement, and assumes that the Bush tax cuts do not expire.
Under this base case scenario, net general government debt would rise from 74 percent of GDP in 2011 to 79 percent in 2015, and 85 percent in 2021.
But the S&P's revised "upside scenario" assumes that the Bush tax cuts expire in 2013, which it said would slow these increases. If the tax cuts expire, S&P expects the debt-to-GDP ratio to increase more slowly, to 77 percent by 2015 and 78 percent in 2021.
S&P's revised "downside scenario" shows the cost of not following through on spending cuts. In this case, the debt-to-GDP ratio would increase to 90 percent in 2015 and 101 percent by 2021.
The report does not say these increases would be due to the lack of spending cuts alone -- also part of this downside scenario is an assumption that interest rates rise, and the presence of other less favorable economic conditions.
US credit should have been downgraded, but it irritates me to read the tacky little comments where S&P tried desperately to be so PC.
S&P did not see fit to state the obvious: This nation has spent a great deal of borrowed money careening down the road to socialism. Democrats have thus purchased the votes of minorities, unions, students, unemployed, and unmarried heads of households. To a lesser extent, Republicans, too, have thrown money at some of their favorite backers.
I am enormously fearful about our future. One GOOD thing, though: My grown children feel that, at last, even the dimmest intellects will have to face reality.
The US must reduce spending and taxes in order to win back our high credit rating and become a respected world power again.
More revenue would come from lowering the rates and broadening the base. In fact, a single, flat rate tax that hits everyone would be ideal.
Economically, a flat retail sales tax or a flat income tax would be acceptable. A flat retail sales tax has some longer term advantages over an income tax - but either would be an answer to more revenue.
Of course, something is gonna have to come from the bottom 50% and they’ll scream like stuck pigs. Must. Overcome. Marxism.
So basically gridlock was the cause of downgrade which means one or the other party has to get full control of congress and WH similar to two years ago and make decisive action.
The leftists had their way for two years and this is what we got! Now it’s time for the Republican way?
Well according to this report, http://blogs.dailymail.com/donsurber/archives/39534, even doubling the taxes on everyone brings us up 400 billion short.
Harry Reid said just the opposite, and we all know how smart he is.
S&P is dominated by Country Club Republicans, and they did not want to come out sounding explicitly partisan, parroting Republican talking points, hence the extra care to sound bi-partisan and PC. But you can still read between the lines that the S&P prescription is no different than the Republican prescription.
Yes, that is true. Which is one reason that raising rates won’t work. Raising rates will further inhibit any potential economic growth.
Our economy has to grow - that is the single, most important thing we can do to get our debt under control. Obviously, cutting spending [not just reducing the growth rate - but actual cutting] has to be done also in order to get the most out of the growth.
Lowering the tax rate _will_ lead to economic growth. Especially a flat rate consumption tax like a national retail sales tax or a flat income tax. Two key components: 1) gotta lower the marginal rates for those who pay and 2) gotta get everyone paying _something_.
This can and must be done within the next 3-5 years. IMO
Only the ignorant liberals can’t grasp the fact the social welfare programs are destroying the countries economy. You could tax at 100 percent and still be unable to fund the liabilities of the social entitlement programs.
Redistribution is never the answer. Empower the people to take individual responsibility and lets end this failed socialist experiment
when will any disingenuous members of the criminal liberal media be honest for a second and ask, if its the GOP at fault because they don’t want to raise taxes why didn’t obama and his left wing extremists that controlled the house/senate, pelosi/reid, raise taxes on the rich when they had insurmountable majorities in DC??? if the Bush tax cuts were so harmful to the economy why didn’t obama/reid/pelosi roll them back when the dims had a filibuster proof senate??? if loopholes for oil companies are so horrible, why didn’t obama/reid/pelosi close them when oil was $35/barrel and gas $1.80/gallon back at the start of obama’s reign of error??? if corporate tax breaks are the scourge of society when will any members of the criminal liberal media have the balls to ask obama why jeff immelt, ceo of GE- a company that pays $0.00 in tax and consistently sends his companies jobs overseas, sitting on a WH committee to create job growth in this country....
but wait- the nation is victim to the Tea Party terrorists and GOP sabotage....
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