Market Plunge and the Blame Game

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Stocks plunged Monday, suffering their worst losses since December 2008, as Wall Street reacted to the news of the unprecedented U.S. credit downgrade assigned by Standard & Poor’s (S&P) late last Friday. The Down Jones Industrial Average ended the day with a 634.76 point decline, the sixth-largest ever. Through various proxies, the Obama administration has been working vigorously to lay the blame on the Tea Party — calling the debacle the “Tea Party downgrade” — and even on S&P itself. The rhetoric, however, hardly matches reality.

“I believe this is, without question, the Tea Party downgrade,” said Sen. John F. Kerry (D-MA) on NBC’s “Meet the Press” Sunday. Not so coincidentally, David Axelrod, the president’s former chief adviser, used the exact same phrase to describe what happened. The sentiment quickly reverberated through the media. This is despite the fact that David Beers, who heads S&P’s government debt-rating department, pointed out that “Congress and the administration are jointly responsible for the conduct of fiscal policy. So, this is not really about either political party,” as he did on Fox News Sunday.

But it’s clear that not all sectors of the Congress were equally responsible for the fiscal recklessness that precipitated the downgrade. Prior to the 2010 election, Democrats controlled both Houses of Congress and the White House. How fiscally responsible were they? In 2009, for the first time since 1974 when current budget rules were put in place, Democrats passed no budget at all. “It isn’t possible to debate and pass a realistic, long-term budget until we’ve considered the bipartisan commission’s deficit-reduction plan, which is expected in December,” said then-House Majority Leader Steny Hoyer (D-MD) in June of 2010.

The commission to which Mr. Hoyer referred was the Simpson Bowles Commission, which did release a report offering a path towards long-term debt reduction. One could have a reasonable debate regarding some of the recommendations, which were a combination of tax hikes and entitlement cuts aimed at reducing the debt by $4 trillion. Yet such debate was not to be. The report was completely ignored by Mr. Obama, despite the fact he commissioned it himself.

Speaking of debates, Republicans submitted three spending plans to Congress since April: the Paul Ryan-inspired “Path to Prosperity,” the first debt ceiling debate budget known as “Cut, Cap and Balance” and the follow-up to that plan. The Ryan Plan was defeated by a 57-40 vote, and the other two were tabled, all without any debate at all. The Senate also held an April vote on the only substantive proposal — as in the only one actually written down — made by Mr. Obama. It was defeated 97-0, by the same Democratically-controlled Senate which still hasn’t passed a budget in over two years.

A Tea Party downgrade? An absolute, unadulterated fantasy.

It isn’t the only fantasy at work. It is precisely the delusion that the debt ceiling deal contains any immediate or substantive spending cuts that provided S&P with the rationale for its downgrade. And that includes any of the so-called spending cuts that will be enacted — or triggered — by the 12-member bipartisan committee tasked with the undertaking. Why? Because the federal government’s accounting methods are calculated using baseline budgeting. Baseline budgeting presumes that any spending increases of a lesser nature than anticipated constitute a “cut” in government spending, despite the reality that the actual dollar amount of that spending increases.

Baseline budgeting is so pernicious that the Congressional Budget Office (CBO) would score an increase in spending of $8.5 trillion over the next decade as a $1 trillion cut, because the projected increase over that same period is scheduled to be $9.5 trillion. Furthermore, just as they are doing now with respect to the downgrade, Democrats would accuse Republicans in general and Tea Partiers in particular of budgetary “terrorism” for daring to resist the automatic increases.

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  • geez

    When you elect a dumb $ss moron and he gets his minions in place, stupid $hit is bound to happen. Hows that hope and change working for you now? And I still see Obama bumper stickers! I'm guessing Obama and Lurch will go on vacation to Europe now.

    • Liber-tea lives

      Henceforth Barack shall be forever rendered Brokus, Brokus Obama our worshipful master and his communist minions intend to destroy our country.

      • Fred Dawes

        God you can see all to well.

    • Fred Dawes

      thank you..by the way the old people who voted for that butt have taken bumper stickers off i once saw many on the cars now you can't fine!! one here in san diego.

  • Amused

    ….and the Tea Party Nation is patting each other on the back ……great Americans that they are . They we concerned about taxing the rich ? Well the rich just took a trillion dollar loss on paper ….well done fools .

    • Fred Dawes

      DON'T YELL YOU WILL GET WHAT YOU WANT THE "former usa",.. as a third world primate house.

  • Rayczar

    Kerry and Axe are just two good reasons politicians need to have drug tests!
    Blame others for your "bad" toxic behavior. Every family has its blacksheep
    who blames everyone else in the family for their dysfunction.

    Rather than realize that their crap (ideas,solutions) to problems don't fly,
    they become unhindged. Consider the Air America crash of radio fame.
    Why didn't their show take off? Because advertisers can't sell crapy
    ideas, the general public knows a bad idea. Thats why conservative
    talk radio sells in the market place, because their ideas make SENSE!

    As for the Republican establishment inside the beltway too, who have
    been drinking the kool-aid, they need drug tests too! Their actions are
    no different. They want the same outcome based failure the Dems want.
    So flush them all in 2012!

    So let's flush Obama too, so he can compete with Clinton for
    King of the World.

    Rayczar

    • Fred Dawes

      All of the monkeys of both parties got to go but the international bankers now own the USA.

  • SHmuelHaLevi

    The concerted efforts… of the so called "administration" extended their disasters all over the world but some, stronger if smaller economies" already rebounded a bit.
    The US internal condition and the US totally dysfunctional foreign policies go hand on hand. Tragic in every respect.
    I never understood why would an educated electorate elect such bottom feeders to lead. American Jews of one sort or another contributed by dumping near 80% of their votes into that cesspool. I guess that such selection and other attributes should preclude that folk from trying to interfere outside the US.
    Since the still formidable economy of the US could return to its former credibility, not all is lost, as long as the ghastly ferment that tainted the government is kept in check.
    MONEY for votes aka "free lunches" must not return to the menu.

  • Gamem

    If an individual had to start a new credit card so he could pay the interest on his other credit cards would we give him an AAA credit rating or an FFF rating? The Obama administration should thank Standard and Poors for stating the obvious and should get back together with the Republicans and this time make the cuts necessary. More importantly he should free up the production of energy in this country which could bring in trillions of revenue (see the online article The Kamikaze Obamanomics of John Maynard Keynes.

  • theleastthreat

    It's been the evil corporations, or the evil Republicans, then the evil insurance industry, back to the Republicans, then on to the evil Tea Party. Who but a Leftist could believe that. Who but a Leftist could read the facts in this article and still go on believing that. That the whole world should be slandered before Obama is accurately assessed is their chief tenet. The fact is clear that Obama is inept as a President. Covering for him doesn't help anyone.

  • mcrobbins

    "Tea party downgrade." Isn't it funny how the mainstream media sound like mockingbirds. The talking points are transmitted from network to network like a contagion.

    • Fred Dawes

      Our government are all monkey butt's. let us put all inside a zoo.

  • tanstaafl

    I know who is responsible for our downgrade and I intend to do something about it in November 2012.

    • Fred Dawes

      I hope we have a vote in 2012

  • muchiboy

    Americans themselves are responsible for the debt crisis.No one nor no one party is blameless,and the The Tea Party must accept a share of the blame because of its black and white,neoconservative,narrow minded,short term worldview and intransigence in Congress lately.I have to agree with your President,America is a Triple A country, and hopefully always will be.America has done so much for our world,and must not lose faith in her valued place in our world still.

    • Fred Dawes

      The big international bankers are responsible and our government take 600 trillon in world debt and it is a plan our bankers need us all in the third world soon and within 6 weeks tell me i am erong my little son.

  • Fred Dawes

    The end is here and now, but no one wants to talk about the 600 trillion our government taken on in the international banking system this coming hell is planned by the bankers/globalist.
    The sad fact is people will not act against the system boys and soon the USA Will just be a total police state and any who think of acting against this police state will understand what happened to the jews in germany..by the way the off shore bankers have moved to china and the usa will become a third world within 10 years, and think of this with multicuturalism and kids who think the world is a joke will soon understand what the real world is,

    • Amused

      Oh take a fu—ng aspirin Dawes ! What the hell are you talking about ! 600 Trillion ???

  • http://prothink.org Gus

    You can thank the Jewish-run Federal Reserve for triggering the housing bubble collapse in the first place, and then handing out OUR tax dollars to the Jewish-run "Too big to fail" banks. This whole damn economic implosion is Kosher from top to bottom.

    • tarleton

      When you have a conspiracy theory it always ends , sooner or later , with ''shylock dunnit''…..get the jew

    • Fred Dawes

      its not only the jews its many others listen son jews had something to do with this attack but the muslims are helping.

      • http://prothink.org Gus

        How the hell are Muslims downgrading U.S. debt? Think much?

  • Amused

    Gus stuff your anti-semite diatribe . AIG too big to fall -not run by jews , Bank of America -nope not a jew , Wells Fargo ? J.P.Morgan a.k.a. Chase ? You go see about the Wall Street crooks who securitized mortgage loans , thats who created the bubble , and then thank all your christian POLITICIANS who repealed the law seperating operations of Commercial and Investmant Banks , then thank the Bush Admin , for appointing its useless toothless SEC "watchdogs " , and btw dont forget Standard & Poors [water carriers for the republicans ] and Moodys , both of which provided the phony ratings for those securitized investment "products " and the phony as hell derivitives that "insured "them -NOT .
    You're an imbecile .

    • Gus

      Wall street is obviously run by the Jews, idiot. Larry Summers, the man who broke up glass-stegall act, was a Jew. Go figure.

      • tarleton

        classic anti semite ….you aren't too far removed from the nazis

        • http://prothink.org Gus

          What was so bad about the Nazis? Weren't they just German nationalists?

      • Amused

        Oh yea , I 'm sure it only took ONE vote ……IMBECILE .

        • Gus

          He was the treasury secretary, idiot. He was the man the administration consulted and listened to due to his knowledgeable position.

  • Amused

    BTW …there's one jew you CAN blame – Greenspan . Appointed by Reagan , kept by G.H.Bush , Clinton , and both Admins of G.W.Bush …. lol all christians .

    • Fred Dawes

      you are right

  • Goebbels

    Um, so maybe the author should have looked at the market before writing this. On Monday people sold off stocks and bought up Treasuries in a massive nose thumb to S&P making it clear the market does not care what S&P thinks. The market purchases drove down yields on long term treasuries because of enormous demand. Any politics assigning any market movement to the debt debate and the S&P down grade is deliberately misleading regardless of party affiliation…that or displaying incompetence to discuss the basics of judging a country's credit rating. The market says long term US debt is a safe bet.

  • Amused

    Not really , it was the Feds promise to keep interest rates at zero for two years , that brought the market up 429 bpts at the end of the day ..

    • StephenD

      Gotta give you props with this stream Amused. I agree with your assessment of the situation. I only wish everyone could see that someone's religious background is irrelevant to human greed.

      • Amused

        Exactly my point Stephen . But you'll never convince a jew hater like Gus a.k.a. Goebbels.

    • Goebbels

      Not really the Fed announcement was after the flight to bonds, so the point about bonds still holds. Not sure how it follows that stock prices per say are involved. The point was about US debt, the market voted the debt ok on Monday after the S&P devalauation and before the interest rate announcement. As side not not sure why you think I am Gus, as his view are certainly vile and off topic. Not sure why you would call the author of post about the S&P downgrade a jew hater either. Unless it makes you feel good or superior. To each his own I suppose.

  • Amused

    If you hadn't noticed Stephen , sarcasm was on , in my remarks to the anti-semite Gus .

  • Amused

    We are where we are due to non-partisan , non-denominational joint effort ,achieved through lobbying to and influence peddling by , our politicians .And there are only THREE motivating factors -GREED , SELF-PERPETUATION and SELF-INTEREST . And they hold themselves up as "patriots " ?