Americans Need Jobs, Not A Right-Wing Austerity Agenda To Make The Rich Even Richer

Trustfund jerk Harold McGraw III uses the company his grandpa built to crash the stock market to bolster his pal Mitt Romney

Worldwide stock markets crashed Monday as determined and uncompromising right-wing nihilism was being factored into everyone's economic calculations. Oddly enough, U.S. treasuries, the target in the S&P downgrade, actually improved. But no one seems to care about that odd detail. Yesterday Paul Krugman asked his readers to behold the power of a stupid narrative, which seems impervious to evidence.

1. US debt is downgraded, sparking demands for more ill-advised fiscal austerity

2. Fears that this austerity will depress the economy send stocks down

3. Politicians and pundits declare that worries about US solvency are the culprit, even though interest rates have actually plunged

4. This leads to calls for even more ill-advised austerity, which sends us back to #2

Meanwhile, the Mitt Romney supporter who controls the S&P, Harold W. McGraw III, hereditary grandson of the McGraw-Hill founder, and like most hereditary grandchildren, a rapid right-wing moron with a tiny little dysfunctional brain, has now started downgrading municipal and state bonds as well.

While not unexpected, the move has far-reaching implications for thousands of local governments already burdened by steep deficits.

Among those affected so far:

• Tacoma, WA.

• Atlanta Downtown Development Authority, GA.

• The Board of Governors of the University of North Carolina

• Miami, FL.

Additional federal debt was also downgraded, including some issued by The Architect of the Capitol and the Department of Transportation.

A report from Reuters was more optimistic on muni bonds:

Two positive factors give the market a shot at hanging onto last week's sparkling gains, when yields on some top quality bonds tumbled as much as 40 basis points: the lack of supply and the safe-haven bid for Treasuries.

"It's so hard to predict, but I don't foresee this announcement by S&P as being a catalyst for selling," said Robert Nelson, managing analyst for Municipal Market Data, which is part of Thomson Reuters.

"The possibility of this downgrade was already known to this marketplace as it traded up so aggressively last week," he said.

Though the municipal market only partly shared the Treasury market's extraordinary rally, analysts say the tax-free market is getting some safe-haven buying from investors unnerved by the stock market's plunge last week.

On Monday, Standard & Poor's is expected to downgrade the ratings of pre-refunded municipal bonds, U.S. mortgage agencies and other credits tied tightly to the federal government. Late Friday, S&P cut the country's credit rating to "AA-plus" from "AAA" and gave a negative outlook to the long-term rating.

Perhaps the downgrading of the U.S. rating might have had more impact on municipals in previous years, when there was a bit of an expectation that the U.S. federal government might ride to the rescue of beleaguered states or cities.

..."I think we've heard from a number of officials in the federal government, and I think that at the same time the federal government is not in any position to bail out states, so in the muni market I think most recognize that the notion of the federal government as a backstop has been pretty largely discounted," Nelson said.

The immediate market impact of the U.S. credit downgrade might be somewhat muted by the tax-free market's traditional strengths.

Many of the tens of thousands of tax-free issuers, from states to counties and schools, raise revenue from their own taxes and fees, independently of the federal government. The default rate historically has been under 1 percent.

"I don't see a tremendous flight out of municipals; you might see credit spreads widening for lower-rated issues, but we also think a lot will hold their ratings," said Evan Rourke, a portfolio manager with Eaton Vance in New York.

"Our feeling is that you can still have an AAA-rated credit ... you could have AAA-rated credits in an AA-plus-rated country," he said.

Wall Street's "solution" is to sell off Social Security and Medicare and leave the elderly to their tender mercies. That isn't likely to happen if the voters elect progressives next year instead of conservative Democrats or reactionary Republicans, the double-headed enemy of America's working families. Carol Shea Porter is running for her old seat in New Hampshire, now that voters there have had a shocking taste of what happens when you trust Republicans with the keys to the car. She has a very different view of the debut "crisis" and what to do about the economy that the conventional anti-family "wisdom" on Wall Street.

Washington is awash in congratulations and claims of noble compromise. House Republicans are bragging about becoming fiscally responsible while maintaining a morally responsible budget. There’s just one problem. It's not true. The only thing they should feel good about now is their vote to keep the United States from a catastrophic default.
 
The national debt is a staggering 14.3 trillion dollars. The debt ceiling deal they struck with Republican Tea Partiers (who the very conservative Wall Street Journal called "tea-party Hobbits") will only reduce the yearly deficits. It will not vigorously take on the debt. That's like paying the new monthly bills on your credit card each month without significantly reducing the overall balance. And most importantly, it will hurt the already struggling middle class and the poor, and drastically reduce the city and state government services our citizens need and rely on. It also will not create jobs; rather, it will eliminate jobs.
 
In order to properly function, this country must raise revenue. And Republicans in Congress have made it perfectly clear that they would have let this great nation crash into default and ruin our credit rather than raise revenue. They would not ask their campaign benefactors to do what the overburdened middle class has been doing for years-- pay up. Republicans refused to close tax loopholes for oil companies and other corporations. They refused to take subsidies away. They refused to give up the Bush-era tax cuts. Just last year, they convinced the president and Congress to extend them as part of a deal to continue long-term unemployment benefits, even though, as the Center on Budget and Policy Priorities demonstrated, the rise in debt would stop if they simply let the Bush tax cuts expire. They know that the top 1% doesn't need those tax cuts since they already receive almost 25% of all income and control more than 40% of the nation's wealth, but Republicans refuse to reclaim that much-needed revenue that could help the debt problem. Republicans also refused to change the tax code, which, as the General Accountability Office warned us back in February of 2009, allowed 67% of US corporations and 68% of foreign corporations to pay zero income taxes. That's right. Zero. Republicans simply would not raise any revenue. This is equivalent to the head of a family simply refusing to earn income, telling the family to instead just stop spending on essentials.

The Republicans refused to raise a single dime to pay down the debt, and President Obama could not get them to compromise at all. They refused to listen to Ronald Reagan's former Director of the Office of Management and Budget, who warned them last summer, "If there were such a thing as Chapter 11 for politicians, the Republican push to extend the unaffordable Bush tax cuts would amount to a bankruptcy filing." They refused to listen to any plea for more revenue, but this country needs everyone, not just small businesses and the middle class, to pay their fair share if we are to reduce our debt.
 
Both New Hampshire members of Congress played follow the leader and took that tea-party/partisan stance, refusing to raise any revenue anywhere on anyone or anything, even if we cut Social Security and Medicare, even if we cut health care, even if we did not repair bridges, even if we cut jobs. These two members have the Republican problem-- they have all signed a pledge, not to their constituents, but to Grover Norquist, the head of Americans for Tax Reform, and they would be severely punished if they violated "the pledge." They would be targeted and attacked on TV, radio, and by mail if they dared to even consider raising revenue from the dodgers.

So here we are, saddled with a Republican majority so beholden to a pledge to protect corporations and the top 1% that they cannot and will not defend the middle class or work to protect essential programs. We have a President who is surrounded by these partisans who threaten to bring down the economy if their demands are not met. And we have an exhausted and all too frequently unemployed middle class that is left wondering why corporations don't have to pay taxes, why the top 1% aren't included in the "shared sacrifice" formula, and why this nation can't pay its debts. But they don’t have to look far for an answer. With this debt-ceiling fight, their Republican leaders just showed the people who they actually work for.