This week Standard & Poor’s provoked what amounted to a non-event when it lowered its outlook on the U.S. debt from “stable” to “negative,” based on its expectation that Congress isn’t going to reach a meaningful compromise on deficit reduction in the near future. The downgrade came just days after the Senate subcommittee on Investigations released its massive report on the causes and villains of the financial crisis. The report indicted S&P, along with Moody’s, for keeping the credit ratings of mortgage-backed securities and collateralized-debt obligations artificially high, then sharply lowering them when the foreclosure rate began to skyrocket in 2007. It explains:
It is widelybelieved that Paul Ryan chose to exact his most severe spending cuts on Medicaid because its low-income beneficiaries vote Democrat if they even turn out for elections, so cutting a program that benefits them won’t hurt the GOP too much at the polls. Unfortunately, eliminating $207 billion in spending, the amount Ryan’s plan will cut, kills jobs and hurts the economy, no matter what program it comes from.
Erskine Bowles and Alan Simpson, chairs of the president’s fiscal commission, have been largely out of the spotlight since the report they produced this fall failed to garner support even within their own group. The plan offered some dramatic and imbalanced suggestions on reducing the deficit, deriving almost 78 percent of its savings from cuts to government spending. Its entitlement-program reforms spared the poorest Americans, but enacted disproportionate cuts on lower-income earners, decreasing Social Security benefits while increasing the retirement age, and also cutting Medicare and Medicaid.
Late last night, long after normal business hours, the New Hampshire House became the latest state government to pass legislation balancing the budget on the backs of the poor and vulnerable. The most contentious part of the legislation gets rid of negotiation rights for the state’s 70,000 public employees if their contracts expire before a new agreement has been reached.