Obama, voters must act to counter the 'Tea Party downgrade'
OPINION - The Republicans in the House of Representatives, the Senate minority leadership and the now infamous Tea Party Caucus, have become professional liars...
The truth hurts, which is why lies are easier to tell.
The Republicans in the House of Representatives, the Senate minority leadership and the now infamous Tea Party Caucus, have become professional liars. From their insidious claims that President Barack Obama was not born in this country, to the outrageous declaration that health care reform would lead the nation into socialism and anarchy, or the belief that the debt and deficit are solely the result of policies put in place in the past two years; Republicans have effectively convinced lawmakers and constituents to ignore facts and embrace fallacy.
But those days in Wonderland have come to an end.
On Friday, Standard & Poor’s, one of the three major global credit-rating agencies, removed the United States government from its list of risk-free borrowers for the first time in America’s history.
The company cut its rating long-term federal debt to AA+, just below the pristine AAA. S&P described the decision as a judgment about the nation’s lackluster political leadership – specifically the Republicans in Congress- writing that “the gulf between the political parties” had reduced its confidence in the government’s ability to manage its finances.
“The downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenge…Compared with previous projections, our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues…”
The S&P report summarized what political analysts, economists and informed voters have acknowledged over the past two years, and especially the past few months, that the political process in Washington is broken, and has been high-jacked by ideologues on the far-right.
So where do we go from here?
The good news is that Moody’s and Fitch, the other two major agencies, have left their AAA rating of U.S. Treasuries unchanged.
Challenges to S&P’s accounting have already been made by the administration and will undoubtedly play out over the coming weeks. There are also questions about S&P’s credibility in light of the fact that they famously made major oversights in providing stellar credit ratings to junk bonds and countless mortgage-backed securities which failed in the credit crisis of 2008-2009.
That aside, the downgrade speaks to the political paralysis President Obama has experienced since the Republican-led Congress took office in January 2011. The divisive nature of negotiations (or lack thereof) and stalemate which led to one-sided compromises, have been observed by our allies and enemies alike, and they are not amused.
The most powerful aspect of the S&P decision is that it was made by an international governing body. S&P uses a multi-national committee to rate the debt of 127 governments, from Angola to Zambia.
Republicans have successfully convinced an ill-advised and largely uninformed electorate of lies, warped in enigma, and trapped in a past which no longer exist.
The concept of American exceptionalism, often touted by conservatives and their Republican spokesmen, has been used to promote out-dated concepts of manifest destiny — naively suggesting that America can seamlessly retain its special position as the world’s de facto economic and political power, without securing the fundamental safeguards necessary to deserve that. The Republicans’ claim that America is so exceptional that rules of science and mathematics no longer apply is delusional at best and dangerous at worst. What made America great in the past is a balance of powers, respect for the ideal of individual freedom and the rule of law. Though history shows the nation has often struggled to provide equal protections in equal measure, the spirit of the Bill of Rights and those who have chosen to embrace it, has led to social progress. This is not the spirit embraced in the halls of Congress today.
What the prolonged debate over the debt ceiling increase has proven is that Republicans are willing to hold American economic soundness ransom in an attempt to further their selfish political ends. This is the crux of the S&P argument, and should serve as a wake-up call to the leaders of both parties in Washington.
Officials defended the downgrade when David Beers, S&P managing director, added “fiscal policy, like other government policy, is fundamentally a political process.” Stalemate and paralysis is not becoming of effective democracy, and without compromise, there can be no progress in a divided government.
Although conservatives like Senate Minority Leader Mitch McConnell and Tea Party Caucus Chairwoman Michele Bachmann, have made it clear their number one priority is to ensure President Obama loses his second presidential bid in 2012, the S&P decision is neither a validation of their hopes (though they’d like to believe it is), nor an absolution of the Obama administration attempts at bipartisanship.
In fact, Obama may well learn to be more decisive and less willing to compromise.
In the latest stalemate over the debt ceiling, pundits and constituents all declared the need for presidential leadership, even if it meant making politically unpopular decisions. Perhaps Obama could have expressed greater resolve and strength by using the 14th Amendment remedy and issuing an executive order; or never agreed to an extension of the Bush tax cuts, and stuck to his guns by insisting on revenue increases in the debt compromise?
The fact that S&P has now validated the Democrats’ argument on tax increases for the wealthy will certainly provide momentum on this issue going forward. But President Obama is not blameless. As chief executive, he has a responsibility to remain ahead of the curve. He has done so in theory, but has lacked in action. The downgrade is the game change. Obama must take control of the discourse, set the tone of the debate, and enforce his political ideology; even if that risk being too strong, too powerful and (dare I say) too “black.”
As for average Americans, the downgrade may have more immediate effects. The value of the U.S. dollar may suffer, and the Federal Reserve could be forced to raise historically low interest rates in order to satisfy investors. Higher mortgage and credit card interest rates, as well as restricted credit facilities would largely hurt the most vulnerable; including African-Americans, Latinos, the working classes and the poor.
At present, these results are speculative, but what is clear, is that voters must act to end the stalemate in Washington. The same wave that brought the destructive Tea Party Caucus into office last year must be utilized to drive them out.
All it takes is one vote: yours.
Edward Wyckoff Williams is an author, columnist, political and economic analyst, and a former investment banker. Follow him on Twitter and on Facebook.