Partisan sniping was alive and well just two days after the United States’ long-term debt was downgraded largely because of Washington’s gridlock.
“This is without question the tea party downgrade,” Sen. John Kerry, D-Mass., said on NBC’s Meet the Press. He said the minority of Republicans in the House who represent the tea party movement coerced the congressional GOP writ large to refuse President Obama’s $4.7 trillion deficit-reduction deal to raise the debt-ceiling that included both spending cuts and additional tax revenues.
David Axelrod, a political adviser to Obama, used the exact same “tea party downgrade” phrase on CBS’s Face the Nation, which aired simultaneously as Meet the Press. The use of the phrase points to the messaging that Democrats will be using over the coming days, as the downgrade is dissected more.
S&P on Friday evening took the unprecedented step to downgrade U.S. Treasuries from AAA to AA+ largely because of what the credit agency says is deepening partisanship. The announcement came just a few days after Obama and congressional leaders agreed to a last-minute debt-ceiling deal, which included no tax revenues and was roughly half ($2.4 trillion in cuts) the total of the grand bargain Obama and House Speaker John Boehner, R-Ohio, were considering earlier on in the negotiations.
House Budget Committee Chairman Paul Ryan, R-Wis., said “both political parties are responsible,” but in the same breath he pinned blame on Democrats.
“Unfortunately our partners on the other side of the aisle have always been unwilling to put a specific program out there to address entitlements, especially health care entitlements,” Ryan said on Fox News Sunday.
Indeed, politicians appearing on the various Sunday talk shows seemed as far apart as ever on key issues like entitlement reform and tax revenues. Sen. John McCain, R-Ariz., appearing after Kerry on Meet the Press, blamed Obama for Washington’s gridlock and S&P’s resulting downgrade.
Host David Gregory pointed out to McCain that he had criticized tea party lawmakers for holding out support for a broader deficit deal in a floor speech last month. But McCain evaded: “I think it’s failed presidential leadership when you don’t put forward a plan, specific proposal to work off of.”
The partisan wrangling won’t bode well for America’s credit rating down the road.
“If it [political gridlock] becomes more entrenched, then that could lead to a further downgrade,” John Chambers, managing director of S&P, said on ABC’s This Week. He forecasted that there was a one-in-three chance of another downgrade.
The relative success of the so-called super committee will be a key indicator of Washington’s ability to compromise, especially in the face of S&P’s threat of another downgrade. Created as part of the debt-ceiling deal, Congress will create a 12-member, bipartisan, bicameral committee that must find an additional $1.5 trillion in cuts by Thanksgiving. If they can’t, across-the-board cuts are set to take effect. The members of the committee have not been selected yet.
“I’m not putting my stock in this committee,” Ryan said. “I think people are overemphasizing what this committee is going to achieve.”
Maryland Gov. Martin O’Malley, chairman of the Democratic Governors Association, and Senate Budget ranking member Jeff Sessions, R-Ala., both appearing on This Week, expressed optimism that the committee could achieve some success cutting the nation’s debt. But they talked over each other and disagreed for most of their joint segment.
Former Federal Reserve Chairman Alan Greenspan said the chance the committee could succeed with significant deficit cuts was “very low.” That would require lawmakers to buck their parties on key issues such as tax increases and entitlement reform, and that’s unlikely to happen, Greenspan said as part of a roundtable discussion on Meet the Press.
While he said it was still safe to purchase Treasuries, Greenspan stressed the symbolic significance of S&P’s downgrade on the nation’s overall economic well-being.
“What I think the S&P thing did was to hit a nerve that there is something basically bad going on, and it’s hit the self-esteem of the United States, the psyche,” Greenspan said. “And it’s having a much profounder effect than I conceived could happen.”
The initial reaction from key politicians suggests Washington’s political establishment hasn’t gotten that message.