S&P Downgrade – Spin vs. Reality
Posted by Tom McCammon in Featured, Politics on August 7, 2011 11:27 am / 7 comments
The liberal spin machine is out in force bandying about this quote from S&P research report [PDF], to *prove* that S&P blames the GOP for the downgrade in the US sovereign debt rating:
“We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act.”
However, they fail to provide the context in which S&P made that statement, which is exculpatory. The full quote is as follows:
“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, a position we believe Congress reinforced by passing the act.”
See, in context the quote shows that the statement is not demonstrative of the reason for the change in the rating, but rather that it explains the change in the base case scenario against which S&P evaluates the credit worthiness. A classic lie of omission.
They also seem to ignore the *actual* reason S&P gives for the downgrade, which is here:
“We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process.”
Please note that I provide the context for the quote, which contains the phrase, “reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process.”, because I’m intellectually honest.
Liberals will argue that this supports their position that S&P thinks its the failure of the GOP to raise taxes that is to blame; however, they’ll be committing another error. Look at that paragraph in relation to this statement, which was included in S&P’s press release:
“Standard & Poor’s takes no position on the mix of spending and revenue measures that Congress and the Administration might conclude is appropriate for putting the U.S.’s finances on a sustainable footing.”
That is, they don’t care if its spending cuts or tax increases, because that’s a political question for voters and lawmakers to decide. So, don’t let liberals try to use a empirically based analysis based on purely capitalist principles to make a political point.
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7 Comments
Well, I was talking to someone credible named “BeckblowsKoch” and s/he said that this was all the GOP’s fault. If the irrelevant Tea Party (GOP?) would just allow the Democrats controlling the Senate and White House to raise taxes (GE paid no taxes in 2010), the money could just keep pouring in (ignore the high unemployment) and continue the unsustainable Ponzi social programs started by Progressive Democrats long ago. Makes perfect sense……
[...] Tom McCammon shows how the liberal spin machine is selectively quoting the S&P report in order to, well, lie of course! S&P Downgrade – Spin vs. Reality. [...]
Well, I hope now Moody’s and Fitch dont follow S&P and downgrade US. Moody’s and Fitch have been warning the US but i hope they dont take any extreme step
In direct contradiction to what this article says, S&P acutally says that it changed its mind and decided to downgrade us because whereas it originally thought the Bush tax cuts were due to expire by the end of 2010, now it sassumes they will remain in place because the Republicans refuse to let them expire in order to increase revenue:
“America’s governance and policymaking becoming less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy.
Under our revised base case fiscal scenario–which we consider to be consistent with a ‘AA+’ long-term rating and a negative outlook–we now project that net general government debt would rise from an estimated 74% of GDP by the end of 2011 to 79% in 2015 and 85% by 2021.
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, a position we believe Congress reinforced by passing the act.”
http://www.standardandpoors.com/servlet/BlobServer?blobheadername3=MDT-Type&blobcol=urldata&blobtable=MungoBlobs&blobheadervalue2=inline%3B+filename%3DUnitedStatesofAmericaLongTermRatingLoweredToAA.pdf&blobheadername2=Content-Disposition&blobheadervalue1=application%2Fpdf&blobkey=id&blobheadername1=content-type&blobwhere=1243942987733&blobheadervalue3=UTF-8
[...] giant truck-load of hooey. Not only did the Democrat attack poodles deliberately distort what Standard and Poor’s really said, they have maligned the majority of Americans, including most of the people who call themselves [...]
I am a pretty far left liberal, but the way my fellow progressives have dealt with this downgrade is pathetic. Yes… Republicans were at fault, but so were Democrats. And Obama. This downgrade was not a GOP or Democrat downgrade… it was a US Government downgrade. The refusal to compromise or act civil is what caused this and is making so many investors weary.
Funny stuff. FoxNews and talk radio do nothing but lie and take quotes out of context to push a fact-challenged and utterly dishonest agenda, yet this small potatoes omission from the left gets you outraged. TFF, as the kids say!