Don't shoot the messenger

The downgrading of the U.S. credit rating by Standard & Poor's was expected; it surprises me that the administration was taken by surprise or took it as vindictive action.

The downgrade, the first time in U.S. history, is based on the inability to prioritize spending, and to develop a coordinated plan to balance the nation's budget.

It is laughable when non-conservatives try to explain how government doesn’t need to conduct itself as conservative taxpayers do; to buy what can be afforded and borrow only if absolutely necessary; and maybe do without.

The U.S. is more than $14 trillion in debt. Is there any rational person out there who doesn’t think there’s something wrong with that situation?

Thankfully, we live in a country where we can vote the scoundrels out. Get rid of politicians who do not have the discipline to say no to spending money the country doesn't have on earmarks and special interests. Voters must make their voices heard again in 2012 as they did in 2010; remove those who cannot or will not control and prioritize the spending of the people's tax dollars.

Infrastructure is needed, as well as a working education system and protection for citizens at every level — that is not the spending issue. The issue is the obscene amounts of tax dollars wasted.

It would be bad enough if it were just tax dollars, but the nation is now borrowing the money.

Enough is enough. Voters must let them know at the ballot box.

Amedeo Lauria, Sabattus

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Comments

Amedeo Lauria's picture

No good deed goes unpunished!

UPDATE: Interesting to note in the news today that the Department of Justice is going to investigate S&P; very chilling. Did anyone doubt this was going to happen? Hell hath no fury...

Jason Theriault's picture

S&P should be shot

1. S&P was wrong to downgrade the US. As my father has always said – The market doesn’t lie. Where did everyone run to when the stuff hit the fan? US Treasuries. Our treasury bonds are at an all time low. If S&P was right, the rates should have gone up, but everyone knows that S&P was wrong, so they are just ignoring it.

2. S&P’s downgrade was about their credibility. I have read from various major sources that S&P told major customers that they were going to downgrade the US early Friday. Then when the White House showed them their math was wrong, they had two choices: Admit it, and look bad in front of major customers, or forge ahead, data be damned.

3. Both sides are to blame. I love this line:
‘It is laughable when non-conservatives try to explain how government doesn’t need to conduct itself as conservative taxpayers do; to buy what can be afforded and borrow only if absolutely necessary; and maybe do without.”

I love how much Conservatives rail on wasteful spending, but then give a pass to the DoD. Try and cust waste at DoD, you’re a commie who wants to let the terrorists invade, convert us to Shari law, and force all our daughters into harems.

PAUL ST JEAN's picture

You make great points except

You make great points except for the last one; the only department of govt. that has the slightest level of legitimacy is the DoD. In this world, without a strong military, you have no country, or you are required to learn a foreign language in your own land due to foreign occupation. Have the military been pointed in the wrong direction by their leaders at times? Absolutely, but that is no reason to ever, ever cut military spending. Reagan doubled the military budget during his presidency. The end result? The collapse of the Soviet Union and the dismantling of the Berlin Wall. Not too shabby. Money well spent.

Jason Theriault's picture

But the Cold war is over, and our military doesn't reflect that.

I disagree with your point that "that is no reason to ever, ever cut military spending". The problem during the cold war was that Russia had far more conventional military power than the United States. So we had to maximize every force multiple to try and catch up. Our tanks, our planes, our everything had to be far more lethal and effective. So we had to spend tones of money.

But that is no longer the case. Without a superpower, maintaining the military at superpower levels is just a waste of money. Additionally, because of the organizational momentum, changes are hard to implement, and we are stuck with a 20th century military.

Our military is designed to fight a land war in Europe or North America. There is zero chance of that happening. Do you think that anyone is going to invade America? To quote Yamamota, the last person to even come close to it: "If we were to attempt to invade The United States, There would be a rifle behind every blade of grass.". Screw military, the United States has more guns per person than any other country.

Claiming that cutting DoD is going to lead to that foolishness is tantimount to "Death Panels"

PAUL ST JEAN's picture

"Without a superpower,

"Without a superpower, maintaining the military at superpower levels is just a waste of money."
Iran, India, Pakistan, Russia, No. Korea, China...None is a superpower, except maybe Russia, but all have nukes. What do you think keeps them in line? The thought that we ARE a superpower; nothing else. There is no better reason to remain a superpower than to keep the rest of those bozos in line.
You're entitled to your position and opinion, but you've done abosolutely nothing to change mine. This is where we shake hands and go for a beer.

CLAIRE GAMACHE's picture

I smell a rat

To many economists the downgrade made no sense. If you put it in the context of other countries who have maintained their ratings in spite of way worse economic problems and the AAA ratings S&P gave those worthless derivatives 2 years ago, you have to believe something else was going on here. Now they are investigating some suspicious stock trades that went on just prior to the downgrade for insider trading. Also now S&P are claiming we were not downgraded for the state of our economy but because of the inability of Congress to come up with a long range plan. Sounds like it was more about politics than economics to me. So why didn't they downgrade us the last 94 times we raised the debt ceiling? And why were we not downgraded when the budget was bleeding red ink during the Bush administration?

PAUL ST JEAN's picture

AHAHH!!! I knew it....Bush's

AHAHH!!! I knew it....Bush's fault again.

 's picture

your words, not hers. Now

your words, not hers. Now are you going to lambast her for allegedly saying your words?

PAUL ST JEAN's picture

Wouldn't think of it. I'll

Wouldn't think of it. I'll leave that up to you and the other lambasters in the room.

MICHAEL LEBLANC's picture

The odor you object to ...

... is the main pheromone of the US political class, both sides. The best deodorizer is, as always, sunlight. Instead of jerking left knees and blaming all problems on the Tea Party, we should thank them for opening the factory doors and letting us all see how sausages are made.

Claire, do 94 wrongs make a right?

CLAIRE GAMACHE's picture

Right or wrong?

When discussing our financial community, it is important to remember that they are like alligators who will voraciously devour anything that smells like profit to them. Right or wrong never, ever enters into their decisions. I do know that it did not add up to a crashed economy or a downgrade not even once.

MARK GRAVE's picture

Okay, call it the Tea Party Downgrage - Do you feel better?

If it makes people feel better or find comfort, okay, let’s call it the Tea Party downgrade – do you feel better?

No matter who you blame, the downgrade was a necessary event to bring deficit spending to the forefront.

The only solution is to cut spending, either by choice, or by necessity. Year over year government expenditures are becoming a larger part of GDP, the tax base is shrinking – bottom 50% pay virtually no taxes, a growing resentment with those who pay the taxes, and diminishing ability to borrow money will force reductions in spending at some point. In my opinion within the next decade as the debt nears 150% of GDP.

So ask yourself – do you want a controlled landing (reduce spending now) or a crash landing (well, just look to Greece and wait)?

In closing, I what to spend a few minutes responding to those how will say we need a combination of spending cuts and revenues. I first heard about the “balanced approach” during the Ragan administration, and I bought into then. Thirty years later I’m still waiting for the balanced approach to produce results. The balanced approach is not working; it is simply a means to kick the can down the road.

Cheers,
Mark

RONALD RIML's picture

The bottom 50% pay virtually no taxes???

Not really - but perhaps because they receive virtually little income, Mark. But they do certainly do pay their 'Fair Share'

Let's look at the report Wealth, Income, and Power by G. William Domhoff - updated July of 2011.

Figure 7: Share of all income earned and all taxes paid, by quintile

The top 20% of earners in the U.S. earned 59.1% of all income, while paying but 64.3% of all taxes. Not too bad of a deal, as they weren't squeezed overly hard concerning their wealth.....

The next higher 20% of earners earned 18.9% of the income, and paid 18.9% of the taxes. So they were spot on....

The middle 20% earned 11.6% of the wealth, and paid 10.2% of the taxes.

The fourth quintile earned 7.1% of the income and paid 5% of the taxes, while the bottom quintile earns 3.5% of the income and pays 1.9% of the taxes.

So where are the wealthy getting screwed, or the low-income getting away with murder? The statistics certainly don't bear that out.

Another graph for you. The share of income - paid as taxes - varies from 16% to 31.6% Obviously that 31.6% isn't as high as as the doomsayers have been crying - or as we obviously require.

Figure 6: Share of income paid as tax, including local and state tax

MARK GRAVE's picture

View this Report with Trepidation

Ronald,

In short, I reviewed the data you cited. I lack the time to dissect the report in detail, but here are some red flags that indicate we should treat this data with caution; That is, it warrants further investigation before I buy into the report.

1. Tables 6 and 7 are from an organization called Citizens for Tax Justice, which goal is to lobby for “fair taxes for middle and low-income families.” – I’m not asserting this organization is biased, but this is one red flag to dig deeper.

2. Data used in tables 6 and 7 include state and local taxes, but the report fails to document the methodology used to derive the numbers used in the report. State and local taxes vary widely, so is the data used a simple mathematical average, weighted average, or data from only major metropolitan areas – the method used can skew the results widely.

3. I would expect to see a measureable difference in the state and local tax percentages as incomes traverses the boundary between those at the lowest end, who typically don’t own homes, to income levels where homeownership is more common. Property tax should be significant and measurable addition to one’s tax burden. State and Local tax burden looks relative flat to me.

4. In figure 6, the Federal tax burden does not match that cited in IRS tax data (i.e. The Tax Foundation). Again, if the report cited variables used to derive results, I could objectively criticize them.

In closing, there are lies, damn lies, and then there are statistics. My gut feel is that there is some bias inherent in this report based upon my first order reading. I would use these numbers with trepidation until scrutinized further.

That is my $0.02.

Cheers,
Mark

RONALD RIML's picture

If you had actually performed some research

You may have found out where the data in Tables 6 and 7 originated - and it wasn't with the 'Citizens for Tax Justice"

See the CTJ Report'All Americans Pay Taxes' in which they attribute the "Institute on Taxation and Economic Policy Tax Model, April 2010" as the source of the data.

You may find the Institute on Taxation and Economic Policy here to research questions you may have on their 'models'

This is their 'Mission' Statement:

"The Institute on Taxation and Economic Policy (ITEP) is a non-profit, non-partisan research organization that works on federal, state, and local tax policy issues. ITEP's mission is to ensure that elected officials, the media, and the general public have access to accurate, timely, and straightforward information that allows them to understand the effects of current and proposed tax policies. ITEP’s work focuses particularly on issues of tax fairness and sustainability. ITEP works directly with lawmakers, non-governmental organizations, the public, and the media to achieve these goals."

RONALD RIML's picture

Appears to be more veracity in my post than your:

"bottom 50% pay virtually no taxes" according to Mark Gravel.

MARK GRAVE's picture

Easy to find... needs more effort to understand.

Ronald,

Okay I hear you, but can you address any of my concerns about the report?
It is easy to find this kind of stuff on the internet; it takes a bit more effort to understand them.

RONALD RIML's picture

You have concerns....

But no data to express those concerns nor contradict the report.

You stated: "the bottom 50% pay virtually no taxes" and I exposed you for the B.S.er you are.

MARK GRAVE's picture

Correction

Replace "figure" for all instances of "table" in text.

Mark Wrenn's picture

Tea Party downgrade

Call the S&P downgrade exactly what it is - the Tea Party downgrade: "because the majority of Republicans in Congress continue to resist any measure that would raise revenues." http://goo.gl/OLKYI

Joe Morin's picture

How do we do that???

How do we generate another 1.7 trillion in tax revenues??? Because the majority of Democrats in Congress continue to resist any measures that would decrease spending??? So...about half of the country pays federal income tax and from that top 50% you propose 1.7 Trillion more??? Also, the teaparty downgrade??? You truly think we were downgraded becasue of 15 or so Freshmen Reps?????? Had nothing to do with spending or deficits.

 's picture

We need to throw out all the

We need to throw out all the politicians who REFUSE to pay for our budget. If we're spending xyz amount, then revenues should equal xyz. But republicans have REFUSED to do so for over ten years. Get rid of them.

Joe Morin's picture

Really guy???

I get the whole Bush started two wars etc... approx. 4 Trillion in change. Do you know what Obama and his majority did in D.C. for two years??? We only know part of it, we get the rest in '14 when he'll A) be out of office or B) be half done his second term laughing about that hope & change kool-aid everyone bought. But a guy like me, Libertarian, Independent Conservative,maybe even...should I say it??? Tea Party? Gasp!!! is the Nazi/ Terrorist/ racist??? Dems prefer Establishment GOP because they play wink & a nod a lot better than Tea Partiers. Tea Partiers haven't figured out the game yet. The whole I'll do this, he'll do that, (R)&(D) always ends up with (C)citizens bent over the barrel. I'll gladly take 2.5Trillion today for a trillion in ten years...washington is like a bad comic. Note; jughead hamburger analogy

PAUL ST JEAN's picture

What about the dems who agree

What about the dems who agree with the republicans? What would Tron and Lil do with them?

MICHAEL LEBLANC's picture

Stay tuned ...

They will apologize for them. What else can they do?

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