Conservatives in Washington are working around the clock to try to shift the blame for Standard and Poor's first-in-history downgrade of the United States' credit rating.But Americans are not buying their spin. Conservatives in Congress threatened us with economic disaster to protect millionaires from paying a dime more in taxes — and they say they'll do it again. We've all had enough of reckless political brinkmanship — we need responsible leaders who put our jobs above theirs.
It doesn't have to be this way. We can get rid of massive tax giveaways for millionaires and use that money to pay Americans who keep our country running. Here's a factsheet on how the downgrade happened and how it could have been avoided:
USA loses its AAA rating
- For the first time in U.S. history, the United States does not have a AAA credit rating.
- WHY? Because Standard & Poor’s (S&P)—one of the “big 3 rating agencies,” (along with Moodys and Fitch) —downgraded our credit rating to AA+ on August 5th.
Why did they do that?
- S&P is unhappy with the compromise made between Congress and PresidentObama to cut spending and raise the debtceiling.
- S&P was looking for Congress and the President to:
1. Cut $4 trillion from the deficit in 10 years! S&P warned Washington that the U.S. rating was at risk if they did notcut deficit spending by $4 trillion over 10 years. But the recent compromise cuts spending by only $2.4 trillion over the next 10 years.
2. Raise Revenue! S&P insisted that revenues had to be raised (taxes increased) in order to stabilize and equalize the general debt burden.
3. Get along! S&P pointed out the “lack of apparent willingness of elected officials as a group to deal with the U.S. medium term fiscal outlook.”
Wait! Didn’t Obama’s plan offer all of the above!
Obama’s plan, presented in April 2011, offered the following:
1. $4 trillion in cuts within 12 years (not 10 but close)
2. A revenue hike by overhauling the tax code to close loopholes and end some breaks for wealthy individuals and corporations.
3. Additional revenue by ending the Bush Tax cuts for the wealthiest Americans. Note: These tax cuts are due to expire at the end of 2012.
What about cooperation?
The plan was resoundingly defeated by House Republicans who refuse to raise taxes under any circumstances.
Sources: Donovan Slack and Mark Arsenault, “Obama Seeks $4 Trillion Cut to Deficit, Higher Taxes for Rich,” boston.com, 4/14/11. Hans Nichols and Roger Runningen, “Obama Offers Plan to Cut $4 Trillion from Deficit,” HHStockExchange, www.hhse.biz, 4/11. Hans Nichols and Roger Runningen,“Obama offers plan to cut $4 Trillion from Deficit,” 4/11. Matt Krantz and Kathy Chu, “S&P downgrades U.S. Credit Rating from AAA, USA Today, USATODAY.com, 8/6/11.“Obama Proposes Cutting $4 Trillion FromDeficit in 12 Years,” Bloomberg, www.bloomberg.com, 4/13/11. Reuters with CNBC, “Obama Proposes Cutting Deficit By $4 TrillionOver 12 Years,”www.cnbc.com, 4/13/11.
This factsheet was written by Ginny Downie of Fredericksburg for her website www.justthoughtyoushouldknow.org