Dems Willing to Risk Economy for a New Credit Card

July 18, 2011

Dems Renew Calls for New Credit Card With No Strings Attached Despite Ratings Agency Warnings that U.S. Bonds Will See Downgrade Without Spending Cuts

Democrats on Friday renewed their calls for a new credit card to continue their spending spree without any accompanying spending cuts.
House Democrats’ insistence on new spending defies announcements by Standard & Poor’s and Moody’s last week that they would look at downgrading the U.S. bond rating without meaningful deficit reduction—a decision that would have serious repercussions for an already weak economy.
Democrats spent the past several weeks accusing Republicans of not making a “shared sacrifice” by opposing tax increases that will hurt our economy, set back job creation and pinch already struggling families and small businesses. Is the Democrats’ plan to give themselves a new credit card with no spending cuts their idea of “shared sacrifice”?

BACKGROUND:

Democrats on Friday renewed their calls for a new credit card to continue their spending spree without any accompanying spending cuts:

DEMOCRAT WHIP STENY HOYER (D-MD): “I have told Mr. Boehner that our party stands ready to ensure we do not default on our debts. And I believe that almost every member of our party if not every member of our party would vote on a clean extension to make that happen.” (Remarks from Steny Hoyer during Press Conference, MSNBC, 7/15/2011)

WELCH SAYS IT’S A NEW CREDIT CARD WITH NO STRINGS ATTACHED OR DEFAULT: “Rep. Peter Welch (D-Vt.), a chief deputy whip who’s championed a straight up vote on raising the debt limit, portrayed a clean vote as the only remaining alternative before the government maxes out on its borrowing authority on Aug. 2 – saying it was difficult for him to see a path to an agreement with the GOP.

” ‘It’s looking like default or a clean extension,’ Welch said in an interview. He said he was getting support from ‘more and more Democrats, including some members who did not vote for the clean extension on the floor however many weeks ago … we’re absolutely intent that we’re keeping our AAA credit rating.'” (Seung Min Kim, “Hoyer: Dems would support a ‘clean’ debt ceiling vote,” Politico, 7/15/11)

House Democrats’ insistence on new spending defies announcements by Standard & Poor’s and Moody’s last week that they would look at downgrading the U.S. bond rating despite an increase in the debt limit if such an increase takes place without meaningful deficit reduction—a decision that would have serious repercussions for an already weak economy:

STANDARD AND POOR’S FOLLOWS MOODY’S, THREATENS RATINGS DOWNGRADE WITHOUT DEFICIT REDUCTION: “A day after Moody’s Investor Service warned that the United States’s credit rating was in danger of being lowered, Standard & Poor’s followed suit Thursday.

“S&P, one of the three major ratings agencies, said it ‘has placed its ‘AAA’ long-term and ‘A-1+’ short-term sovereign credit ratings on the United States of America on CreditWatch with negative implications.’

“S&P said the move ‘reflects our view of two separate but related issues.The first issue is the continuing failure to raise the U.S. government debt ceiling so as to ensure that the government will be able to continue to make scheduled payments on its debt obligations. The second pertains to our current view of the likelihood that Congress and the Administration will agree upon a credible, medium-term fiscal consolidation plan in the foreseeable future.‘” (“S&P Follows Moody’s on U.S. Debt,” Politico, 7/14/2011)

“U.S. DOWNGRADE WOULD RIPPLE INTO EVERY HOME”: “The threat that the U.S. might lose its coveted Aaa debt rating probably seems esoteric to most casual observers. … But the ripple effect from such a downgrade would be widespread and potentially severe, impacting everything from local municipalities and the neighborhood bank to home mortgages and student loans.” (Dunstan Prial, “U.S. Downgrade Would Ripple Into Every Home,” Fox Business, 7/15/2011)

FEDERAL BUDGET DEFICITS TO PASS $1 TRILLION FOR THIRD STRAIGHT YEAR: “The federal budget deficit is on pace to eclipse $1 trillion for a third straight year as congressional and White House negotiators try to hammer out a deal on the nation’s budget.” (Vicki Needham, “Federal Budget Deficit Nearing $1 Trillion,” The Hill, 7/13/2011)

AND LET’S REMEMBER: DEMOCRATS INCREASED DEBT BY $3.6 TRILLION IN TWO YEARS: “In January 2009, the national debt stood at $10.6 trillion. Fueled by the so-called stimulus, this debt grew by $3.6 trillion in just two years. The magnitude of this amount is difficult to grasp without a comparison. Under Mr. Obama, government has been borrowing $4.6 billion each and every day. That’s more than it cost to construct the world’s tallest building, Dubai’s Burj Khalifa. In other words, the amount of future productivity being sapped from the American economy would be sufficient to construct a new 160-story skyscraper every day of the year.” (Editorial, “Obama Spending Hits New Records,” The Washington Times, 3/8/2011)

Democrats spent the past several weeks accusing Republicans of not making a “shared sacrifice” by opposing tax increases that will hurt our economy, set back job creation and pinch already struggling families and small businesses. Is the Democrats’ plan to give themselves a new credit card with no spending cuts their idea of “shared sacrifice”?:

OBAMA DEMANDS “SHARED SACRIFICE” IN THE FORM OF TAX INCREASES ON SMALL BUSINESSES AND FAMILIES—BUT WHAT SACRIFICE ARE DEMOCRATS OFFERING? “Faced with steadfast GOP opposition to tax increases, [Obama] asked Republican leaders directly what ‘shared sacrifice’ they were offering.” (Ben Feller, “Obama’s Hands-On Negotiation A Political Necessity,” Associated Press, 7/15/2011)