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Monday, August 08, 2011

You can believe me or you can believe your lying eyes --- Democrat style

by digby

Moody's weighs in with a hearty high five to the fiscal scolds:
As financial markets struggled to digest the unprecedented downgrade of the U.S. credit rating by Standard & Poor's, Moody's issued a new report making clear that just because it still has America at a AAA grade, that status was far from a sure thing. In fact, Moody's could also issue a downgrade before 2013 if the nation's economy worsens or lawmakers lose their focus on getting the nation's finances in order.
The firm said it would "closely monitor" progress in Washington when weighing the nation's rating.
And Washington, unfortunately, is paying attention:
Before their talks broke down last month, President Obama and Mr. Boehner were pursuing a “grand bargain” that sought savings of $4 trillion over a decade.
Senator Kerry also endorsed that goal. The United States must show the markets that it is “deadly serious about dealing with its long-term structural debt,” he said, and the way to do that is by “putting a plan on the table, $4 trillion plus, if necessary.”
Recall that Kerry is supposed to be one of the economic liberals, holding the line.

Meanwhile, the Tea Party has upped the ante:
The new panel will have 14 weeks to do its work. Republicans have made clear that they will push for cuts in federal spending under the new health care law, arguing that it should be on the table along with other government programs and tax breaks. The Congressional Budget Office says the law will cover 34 million uninsured people by expanding Medicaid and subsidizing private insurance at a cost of $1.1 trillion over 10 years.
S.&P. did not advocate a specific mix of increased revenue and spending cuts. But it did say that overhauling entitlement programs was “key to long-term fiscal sustainability” and that the debt deal “envisions only minor policy changes on Medicare.”
Ezra says that partisan divisions will only get deeper if the economy tanks further. He's talking about any chance for further stimulus (for the most part) but considering what these people are really contemplating, I pray for him to be right. Unfortunately, from the way it looks, they may very well be able to find consensus on the Grand Bargain.

But this revelation from Ezra is somewhat stunning, even for this White House:

Though the White House wants to seem proactive on jobs, advisers know that voters will judge the president on the state of the economy, and they want to dispel the notion that the country is imminently headed toward a cliff. “Indeed, the White House seems to want to tamp down the sense of urgency, given Jay Carney’s statement that they do not believe a double-dip recession is imminent,” Sides notes, referring to the White House press secretary’s comments last week. “If people are panicking, they’re only going to go with the other guy,” adds the Democratic aide. But Obama’s efforts to soothe fears about the economy may also make it more difficult for his Democratic allies to urge immediate, short-term action on the Hill. If there’s no need to panic, then what’s the rush?

Yeah, what's the rush?

If that's true we are dealing with the most cynical administration in recent memory. They are planning to do the patented Bush tactic of "you can believe me or you can believe you're lying eyes"? And they are doing this under the illusion that this will prevent people from "panicking" and voting for the other guy? I'm finding it hard to believe this, actually. If this country is going into another recession, Democrats putting their heads in the sand and pretending like nothing's happening isn't going to work any better than it's been working since the Green Shoots of 2010. They just can't be this strategically myopic.

Update: The President is on TV right now going on about deficits and compromise and blaance and all the usual ineffectual bromides and endorsing the Gang of 6, Simpson and Bowles and his own aborted Grand Bargain with John Boehner. He does say that he wants to extend the payroll tax cut and Unemployment Insurance and something, something about bridges and roads, so that's good.

As far as laying the blame for the debacle at the feet of the lunatics who have promised to hold the debt ceiling as a hostage for all time, he had this to say:

This is the United States of America and no matter what some agency may says we always have been and always will be a triple A country. Despite all our challenges we still have the best universities, some of the most productive workers, the most innovative companies, the most adventurous entrepreneurs on earth. What sets us apart is not only that we have the capacity but also the will to act. The determination to shape our future. The willingness in a democracy to work out our differences in a sensible way. And move forward not just for this generation but for the next generation. And we're going to need to summon that spirit today.
I'll bet the Republicans are so grateful that the President didn't blame them for the debt ceiling debacle that they will happily cooperate in future legislative initiatives. Like passing free trade deals. And cutting spending, regulations and taxes.

Update II: Not that I think the President's speech had anything to do with it, but it's worth noting that the market's down 541 as I write this. A couple of hours to go --- maybe the bargain hunters will start swarming ...

Update III: Krugman on this downgrade doom loop