Yahoo: 'America's Credit Rating Was Intentionally Sabotaged By Congressional Republicans'
"[I]t's difficult to escape the conclusion that America's credit rating was intentionally sabotaged by Congressional Republicans."
So wrote Yahoo Finance economics editor Daniel Gross Friday evening:
In downgrading the U.S.'s credit rating, S&P points out what has long been obvious: Washington's inability to come to an agreement on how to close the large fiscal gaps that have emerged since the recession began is troubling. Recent events have sapped the agency's confidence that the government can and will do what is necessary to align revenues with spending commitments. And it's difficult to escape the conclusion that America's credit rating was intentionally sabotaged by Congressional Republicans.
And what's Gross's real beef with Republicans? If you guessed "No new taxes," give yourself a cigar:
It has long been obvious to all observers -- to economists, to politicians, to anti-deficit groups, to the ratings agencies -- that closing fiscal gaps will require tax increases, or the closure of big tax loopholes, or significant tax reform that will raise significantly larger sums of tax revenue than the system does now. Today, taxes as a percentage of GDP are at historic lows. Marginal rates on income and investments are at historic lows. Corporate tax receipts as a percentage of GDP are at historic lows. Perhaps taxes don't need to rise this year or next, but they do need to go up in the future.
Otherwise, the math of deficit reduction simply doesn't work.
"Otherwise, the math of deficit reduction simply doesn't work."
Bear in mind, this is Yahoo Finance's economics editor, who appears to not understand math.
Since the Democrats took over Congress in 2007, spending has increased by $1.1 trillion or 41 percent.
If we went back to the exact same outlays called for in that last budget approved by a Republican Congress, we'd actually have a $200 billion surplus in fiscal 2012 based on OMB's projected tax receipts for that year.
If we adjusted 2007's spending for inflation, we'd only have a $43 billion deficit next year thereby totally avoiding S&P's downgrade without raising taxes one cent.
How's that for simple math, Mr. Economics Editor?
(H/T NB reader Rusty Arnold)
*****Update: Twitter's @mattjmobile smartly notified me that Gross back in February 2006 predicted the end of blogs. Nice call, Mr. Economics Editor.
*****Update II: @mattjmobile also notes that Gross in February 2010 declared the stimulus a huge success. Is this "economics editor" ever right about anything?