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In Case You Missed It: The Obama Speech Downgrade

- April 19, 2011

Excerpts From The Wall Street Journal

Editorial
Tuesday, April 19, 2011

“Why did Standard & Poor's drop its "negative" long-term outlook bomb on America's AAA credit rating yesterday? S&P revealed no numbers not previously known to a "shocked" stock market, which dropped 140 points. So what's new?

“There is only one reason the rating agency could suddenly have turned this dark on politics in Washington: President Obama's speech at George Washington University last Wednesday. Mr. Obama's "fiscal policy" speech may have sent progressive pundits cart-wheeling, but its political effect was to poison the prospect for budget negotiations …

“The hyper-politicized Obama White House calculated that the release of a GOP proposal by House Budget Chairman Paul Ryan was the moment to unveil its re-election counter-attack. This week Mr. Obama is taking that speech on what looks like the campaign trail, first at a Virginia community college and then in front of the millionaires and billionaires at Facebook's headquarters in Silicon Valley …

“Notably, there was no call in the S&P note for closing the deficit with tax increases … We hope this neutrality reflects some recognition of the way countries like Greece, pressed to cut spending while raising taxes, descend into an endless downward growth spiral. That's how a nation's outlook becomes truly ‘negative.’

“The Obama fiscal policy since 2009 has been to explode the U.S. balance sheet with ever-greater spending financed by monetary reflation—which the President in his speech euphemized as "emergency steps." The result after more than two years is what scares S&P and more than a few Americans: a historically subpar recovery, unprecedented deficits, persistently high unemployment, commodity inflation and now growing anxiety over U.S. creditworthiness.

“The Ryan budget has been criticized as heartless and cruel. But its purpose is to address the rising U.S. debt problem without tanking the U.S. economy, and to do so before a truly heartless and cruel credit downgrade of the sort S&P gave Japan in January. Mr. Obama's response was simply to mock the GOP proposal …

“[T]he S&P outlook is a warning to the White House that financial markets have noticed that this President seems to have decided that his path to re-election lies in demonizing his opponents rather than seeing to the nation's fiscal well-being.”

Click Here To Read The Full Column: http://on.wsj.com/fqgLyd


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