From the Washington Post August 5, 2011:

S&P downgrades U.S. credit rating for first time

Standard & Poor’s announced Friday night that it has downgraded the U.S. credit rating for the first time, dealing a symbolic blow to the world’s economic superpower in what was a sharply worded critique of the American political system.

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Analysts say that, over time, the downgrade could push up borrowing costs for the U.S. government, costing taxpayers tens of billions of dollars a year. It could also drive up interest rates for consumers and companies seeking mortgages, credit cards and business loans.

A downgrade could also have a cascading series of effects on states and localities, including nearly all of those in the Washington metro area. These governments could lose their AAA credit ratings as well, potentially raising the cost of borrowing for schools, roads and parks.

More…

COMMENTARY: Funny how Standard and Poors blew it giving high ratings to mortgage-backed bonds that helped wreck our economy once….now they’re hitting us again.

The consequences of the inability of our government to quit piling up debt,pandering to special interests, juggling the country’s books, giving tax breaks to the rich, funding two wars off-the-books, looking the other way while financial bandits looted the country with funny paper…. is coming home to roost.

If all the analyists are right, the federal government (meaning us taxpayers) are going to pay higher interest costs on the national debt.

All our mortgage and other credit obligations will see higher interest costs to the degree the financial system can get away with this, and state and local governments will face higher interest costs to borrow.

Is this our fault as the people having to pay the taxes and debt?

Well….yes to the degree we elected all the folks and sent them to Washington with demands to take care of our special interests and ignore the consequences of running the country into the ground.

From the WaPo article:

Lowering the nation’s rating to one notch below AAA, the credit rating company said “political brinkmanship” in the debate over the debt had made the U.S. government’s ability to manage its finances “less stable, less effective and less predictable.” It said the bipartisan agreement reached this week to find at least $2.1 trillion in budget savings “fell short” of what was necessary to tame the nation’s debt over time and predicted that leaders would not be likely to achieve more savings in the future.

But were we responsible for the circus that went on in Washington to try and deal with the problems?

Two things come to mind:

One is I will fight any attempt to raise my interest costs of my existing mortgage and other debt because of the DC clown show. The financial wizards expect to rake in billions from the higher interest charges they can make now that S&P downgraded US debt triggering “automatic” interest rate increases tied to T-bills and federal borrowing rates.

I will not pay increased interest costs due to the ratings downgrade and the DC political game show.

Second, as we suffer through the consequences of this political debacle and see our country thrown back into a recession while politicians blame each other and avoid doing the hard stuff necessary…including raising taxes as well as cutting spend and reorganizing entitlement programs….we need to remember who caused all this….from both political parties….come November 2012.

House Speaker John Boehner had a chance to become Speaker of the entire House of Representatives instead of just trying to hold together his fractured caucus of Republicans.

Instead of trying to find 217 votes within the Republicans in the House…which meant passing a bill no Democrat could ever support….Boehner could have taken another path.

Here is that path…there appears to be a majority in both houses of Congress for a package of spending custs and debt reduction which include closing some tax loopholes.

Instead of sticking a Constitutional amendment on the House bill, Boehner could have reached out to Democrats, dropped the Constitutional amendment, added more budget cuts and put in a tax loophole elimination provision.

Yes Boehner would have lost maybe 80 of his Tea Party hobbits.

But he could have gained 90 Democrats in return and passed a bill that would have been impossible for the Senate to reject.

Boehner would have been Speaker and leader of the entire House of Representatives.

Sure he would have been viciously attacked by the hobbits in his own party, and maybe even lose the Speaker’s chair as a result.

But he would have saved America and gone down in history as a real leader for the entire country instead of a partisan hack. He would have become the poster child for courage instead of a desparate politician trying to find 217 votes in his own party.

Our neighbors the Tohono O’odham have a story about Baboquivari…the sacred mountain on the eastern edge of their lands.

Baboquivari is not only a mountain, it is a symbloic place where the tides of history can be changed by those who stand at the boundary between the past and the future…and act for the benefit of all the people. You don’t have to stand on the mountain itself to encounter a “Baboquivari moment”.

Most folks never want to stand at the point of Baboquivari where they can change the direction of history because there are awesome energies loose….not a few people have been driven off Baboquivari mountain by lightning on clear sky days.

But fate sometimes propels people to a Baboquivari moment where what they do at that moment can have profound positive or negative impacts of the whole world.

They can put their self interest ahead of doing the right thing for everyone.

Or they can see the higher purpose and need and act, even though that act may not be in their immediate self-interest.

Boehner had his Baboquivari moment the other day…and he might have saved his power inside the House Republican caucus, but he did nothing to help America transcend the debt limit fight and move forward.

Harry Reid over at the Senate will also stand at Baboquivari, as will Senate Minority Leader Mitch McConnell and President Obama in the next few days.

Someone needs to put their partisan pandering aside and do the right thing for America.

Imagine if you can $14 trillion which is the current national debt.

For all the fuss and furor in Washington…no one is even getting close to really crunching the problem.

First we have to quit spending more money than we take in in taxes and fees. The budget has to be balanced so the deficit does not keep growing. A trillion dollars of deficit spending a year adds up fast.

The only way to balance the budget and reduce the deficit is to reduce spending and increase revenues.

Cutting federal spending to a level where that spending does not exceed existing revenues is imperative.

This is exactly what millions of us had to do when we lost our jobs or saw our incomes reduced in the recession.

But we will not get there if there are any “protected” expenditures. Everything has to be on the table.

But just balancing the current budget does not solve the $14 trillion deficit problem.

We need to wipe that deficit out.

How about reducing it by $1 trillion a year…14 years…deficit gone.

We’re not going to do that without additional revenues.

There are three paths to revenue increases…eliminating tax loopholes….using more “enterprise fund” activities at the federal level (fees for services like cities and states do)…and grow the economy. Does not see like any of these items are really on the agenda right now.

But what if any revenue increases such as closing tax loopholes was used exclusively to reduce the deficit?

As they say when one is in a hole…the first thing you have to do it quit digging.

With all this debate about federal spending and budget deficits…here’s an off-the-wall idea:

Allow taxpayers to check on their return where they want their money to go like we do for campaign fund contributions

For instance, the 1040 could offer taxpayers the following choices:

I want my tax payment to go to/for:

___national defense

___Air force

___Army

___Navy

___Marines

___war in Iraq

___war in Afghanistan

___Environmental Protection Agency

___National park system

___interstate highway system

___Army Corps of Engineers flood levees

___Border Patrol

___Border Patrol fence

___agricultural subsidies

___public housing projects

___NASA

___foreign aid

___Medicare

___Social Security

___Medicade

___pork projects in Congressional districts

___reduce federal deficit
___giving tax breaks to corporations

…you get the idea. The government would be required to only use your payment for what purposes you checked.

Kind of a national referendum of what governmental programs or activities you think it is worth spending your money on.

And I’ll bet no individual or married couple taxpayer will check the box to give tax breaks to corporations.

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Note: we forget it is our money the federal government spends. We work hard for that money. Then we give it to Congress to decide what to do with it.

Does not seem like anyone…Congress or the various federal agencies that spend our money have any sense of value or the work that went into us making that money.

As the clock ticks down on the deadline to deal with raising the federal debt limit, some good quotes come to mind:

“You can always count on Americans to do the right thing, after they’ve tried everything else.” Winston Churchill

“If you’re already in a hole, quit digging.”  Cowyboy Way

“That sooner or later…somewhere…somehow…we must settle with the world and make payment for what we have taken”  Lone Ranger

“If you waste time or money today, you will regret it tomorrow. Practice thrift in all ways.”  Hopalong Cassidy

“Don’t corner something that would normally run from you.” Cowboy Way

“If you looking for a helping hand, start by looking at the end of your own arm.” Patrick Dorinson the Cowboy Libertarian

“The Government keeps trying to make us better people. They’re wasting their time and our money.” Old cowboy

Boehner is supposed to announce his new plan at 4PM EDT which is 1PM our time.

See also:

Enough of the games in DC…solve the darned debt limit problem!

How not to save a boat from sinking

Debt ceiling battle…the national soap opera

Who needs soap opera when we have the gigantic fight going on in Washington over whether or not to raise the national debt ceiling.

Republicans will only agree to raise the debt ceiling by $2.5 trillion if an equal amount of budget cuts are agreed to.

Democrats have proposed budget cuts of something like $1.5 trillion, but want revenue increases to make up the difference.

Republicans say no tax increases.

Democrats suggest getting rid of a lot of the loopholes in the tax code such as the deduction for corporate jets.

Republicans think eliminating loopholes for their corporate buddies is a tax increase because Grover Norquist says so.

Democrats even put reducing future Social Security benefits on the table…providing the Republican would agree to get rid of the tax loopholes.

Liberal Democrats immediately went ballistic that “their” president would be willing to throw old people under the bus.

Conservative Republicans started a fight within the GOP over how close to the edge would they be willing to push the country to get the maximum budget cuts with no “tax increases”.

House Majority leader Eric Cantor pushed so hard at a meeting at the White House that President Obama abruptly got up and left the meeting.

The deadline to approval an increase in the debt ceiling is August 2nd.

Tea party favorite Michelle Bachmann thinks the crisis about failing to increase the debt limit is overstated and seems to want to drive the country off the cliff just to see what happens.

Senate Republican minority leader Mitch McConnell offered a deal to extend the debt limit and then dump the decisions about what spending to cut squarely in Obama’s lap so he’d get the blame for whomever’s ox was gored.

House Speaker John Boehner seems to have been eclipsed by Cantor’s hard line position against Obama. Then again, Boehner, and old Washington hand, may be just giving Cantor enough rope, a tree and a horse to hang himself with.

House minority leader Nancy Pelosi is off somewhere whining about staying true to Democratic Party principles, whatever those are.

Moody’s issues a dire warning about downgrading US Treasury debt ratings.

China begins to think holding US debt is sort of like how we see owning a Chinese-made toy.

Meanwhile, millions of Americans are watching all of this wondering things like….

….if the Republicans succeed in not increasing the debt limit will I get my government check after August 3rd?

…why should we get hit with reductions in our pet government programs if big business keeps getting tax breaks that we don’t get?

…but if we give the feds more money in tax revenues is that not like giving a junkie more crack?

…and since a lot of people had their credit wrecked in the financial collapse, job losses, reduction in home equity values and all the other fallout from Wall Street’s orgy of greed why should we care about the national credit rating?

My guess is most people don’t adhere to a strictly “Republican” or “Democrat” view of the problem or the menu of solutions.

We’ve got to cut spending, no question.

But lets not make the decision on whose ideology wins the fight….lets cut everything.

We’ve got to fix the tax code and stop giving away potential tax revenues because some special interests were successful in getting tax code loopholes they obviously do not want to give up.

If we’re going to feel some pain…everyone should.

Why should I give up my mortgage interest deduction so some corporate fat cat can write off his jet?

Maybe getting rid of the mortgage interest deduction for mortgage amounts over $1 million could work if the corporate fat cats could only get airplane deductions for propeller driven aircraft.

Who makes propeller driven airplanes? Do we?

But, as the show goes on in Washington, it seems like everyone is playing for air time on the network news and cable talk shows.

Meanwhile, millions of us have got to get dressed and go to work or look for work. Tonight we will see act 42 in the DC “showdown at the debt ceiling corral”.

A friend described the process of negotiating the debt limit increase as “you put a Republican and a Democrat in a sinking boat and they argue about whose fault it was the boat is sinking and then realize neither of them know how to swim.”

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How not to save a boat from sinking