Reality Check: Is the Tea Party to blame for downgrade? - Cincinnati News, FOX19-WXIX TV

Reality Check: Is the Tea Party to blame for downgrade?

Posted: Updated:

(FOX19) - Unless you have been hiding under a very large rock, you know that the credit rating agency Standard and Poors has downgraded the United States credit rating.  Two other agencies, Moodys and Fitch kept the U.S. credit rating at AAA.

So why didn't S&P and who is to blame?

First, let's take a look at what some politicians and talking heads have been saying.

Obama campaign advisor David Axelrod called the downgrade a "Tea Party" downgrade on Sunday.  Senator John Kerry and former governor Howard Dean also used the same term over the weekend, referring to a Tea Party downgrade.  So is the Tea Party partly responsible?

What does Standard and Poor's say about their decision to lower the U.S. credit rating? 

"The first thing lawmakers could have done is to have raised the debt ceiling in a timely manner so that much of this debate had been avoided to begin with, as it had done 60 or 70 times since 1960 without that much debate," said John Chambers, the head of sovereign ratings at S&P.

Did the Tea Party members of Congress keep the deal from being done in a timely manner?  

That may be true.  Tea Party members made strong demands over cuts to spending and refused tax increases.  The fighting between Republicans in the House and Democrats in the Senate brought us to an 11th hour deal.

But had a deal been done quickly, would that alone have saved the country's credit rating?

It's not likely because the size of the deal was important.  S&P had already said they wanted to see at least a 4 trillion dollar deal for the next 10 years.  Those same Tea Party members blamed for the fighting were also fighting for a much larger deal than we ended up with.  They wanted to cut much deeper into federal spending and reform entitlement programs.

President Obama also wanted a larger deal that would include tax increases, which Standard and Poors would have supported as well.

Instead, Congress and the President settled on 2.1 trillion over the next decade, which may slow our unsustainable financial situation but certainly does not stop it.

Here's what you need to know.

There is a lot of anger right now over this downgrade and much of it is aimed at Standard and Poors for having the audacity to drop our rating to AA plus.  But that seems like a shoot the messenger tactic.  Few people will admit this is at least a 30 year old national problem of spending more than we have.  Becoming angry at someone who points out that problem, seems to be anger that's misplaced.

Because all S&P really did was point out that credit rating or no, America has to change the way it spends.

And that is Reality Check.

http://news.yahoo.com/p-defends-u-downgrade-moodys-says-u-still-175154411.html

http://www.foxnews.com/politics/2011/08/08/dems-use-downgrade-to-amplify-anti-tea-party-charges/

http://money.cnn.com/2011/08/07/news/international/sp_rating_budget_expert_analysis/index.htm

Powered by WorldNow