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The Not So AAA President

- August 9, 2011

If Obama Actually Cared About Addressing America’s Downgrade, He Could Start By Firing Treasury Secretary Tim Geithner

OBAMA’S SPEECH ON MONDAY SHOWS HE IS IN OVER HIS HEAD AND OUT OF IDEAS WHEN IT COMES TO HANDLING AMERICA’S DOWNGRADE 

In His First Speech Since The Downgrade, Obama Said Our Debt Was Still Highly Regarded; “Despite His Comments, The Main Wall Street Share Index, The Dow Jones, Extended Its Losses, Falling 4%.” “In his first public reaction to Standard & Poor's downgrading the US, President Obama said markets continued to regard US government debt as being the highest possible grade. Yet despite his comments, the main Wall Street share index, the Dow Jones, extended its losses, falling 4%. … Prior to President Obama's speech, the Dow had only been 2.5% lower.” (“Markets Fall Despite Obama Speech,” BBC, 8/8/11)

“The Dow Plunged Another 100 Points To Hover Around 500 After The President's Speech.” “President Obama spoke this afternoon, saying the United States knew well before the S&P downgrade that it had a debt problem. ‘The U.S. will always be a triple-A country despite what rating agencies say,’ he said. He said the good news is the debt is a ‘solvable’ problem and progress is being made. Investors don't seem to agree. The Dow plunged another 100 points to hover around 500 after the president's speech.” (Daivd Kerley, “U.S. Stocks Continue Selloff: Dow Falls More Than 500 Points,” ABC News, 8/8/11)

Obama Had All Weekend To Prepare For His Speech And “All He Can Do Is Promise To Raise Taxes.” “Obama had all weekend and the best he could come up with was a reiteration of his plea for a ‘balanced’ approach to deficit control. That’s right. We have a tumbling stock market, over 9 percent unemployment and a flight to gold (some investment advisers say it will be at $2,500 per ounce by year’s end). All he can do is promise to raise taxes.” (Jennifer Rubin, “Obama’s Horrifyingly Bad Speech,” The Washington Post’s “Right Turn”, 8/8/11)

  • “This Illuminated Obama’s Predicament — Devoid Of Ideas, Bitter About Political Opposition And Completely In Over His Head.” (Jennifer Rubin, “Obama’s Horrifyingly Bad Speech,” The Washington Post’s “Right Turn”, 8/8/11)

MSNBC’s Chuck Todd: “You Get The Sense, WH Knew They Had To Say Something Given The News Of The Weekend But He Didn't Have Much NEW To Say.” (Chuck Todd’s Twitter Feed, 8/8/11)

Politico’s Ben White: “He Had One Good Line In There, AAA Country, And He Buried It Under A Pile Of Tired Old Partisan Garbage.” (Ben White’s Twitter Feed, 8/8/11)

  • White: “Holy Cow. Really? He's Talking About Tax Hikes Again?” (Ben White’s Twitter Feed, 8/8/11)

GEITHNER HAS BEEN A FAILURE AT TREASURY – RATHER THAN BEGGING HIM TO STAY, OBAMA SHOULD TELL HIM TO HIT THE ROAD

President Obama Was “Exerting Intense Pressure” On Geithner To Remain At The Treasury Department. “Seeking to prevent a complete turnover on his economic team, the White House has been exerting intense pressure on Treasury Secretary Timothy F. Geithner to stay even though he has told the president he wants to step down.” (Zachary A. Goldfarb, “Obama’s Senior Ranks Thin On Economists As Recovery Falters,” The Washington Post, 8/5/11)

Geithner Said There Was “No Risk” We Would Lose Our AAA Credit Rating

In April, Treasury Secretary Geithner Insisted That There Was “No Risk” Of The United States Losing Its AAA Credit Rating. PETER BARNES: “Is there is a risk that the United States could lose its AAA credit rating? Yes or no?” TIM GEITHNER: “No risk of that.” BARNES: “No risk?” GEITHNER: “No risk. …” (Fox Business, 4/19/11)

  • When Asked Again If The US Would Keep Its AAA Rating Geithner Said “Absolutely.” BARNES: “So Standard & Poor's is wrong, the United States will keep its AAA credit rating?” GEITHNER: “You know -- absolutely.” (Fox Business, 4/19/11)
  • WATCH THE VIDEO

Geithner Has Supervised The President’s Disastrous Foreclosure Prevention Program

So Far, Only 633,500 Homeowners Have Received Permanent Modifications Through The Home Affordable Modification Program (HAMP). “This program and others are part of Treasury’s Home Affordable Modification Program, or HAMP, which was announced in early 2009, but has fallen far short of initial expectations. As of May, it has helped about 633,500 U.S. homeowners avoid losing their homes through permanent loan modifications, compared with an initial goal of helping 3 million to 4 million borrowers.” (Alan Zibel, “Little Help From Government For ‘Underwater’ Homeowners,” The Wall Street Journal’s “Developments”, 7/1/11)

  • The Treasury Department Has Only Spent $1.85 Billion Of The $46 Billion It Was Given To Prevent Foreclosures. “As part of the bank bailout, the Treasury Department was given $46 billion to spend on keeping homeowners in their houses; to date, the agency has spent about $1.85 billion.” (Andrew Martin, “For Jobless, Little U.S. Help On Foreclosure,” The New York Times, 6/4/11)

Inspector General Neil Barofsky, Who Oversaw HAMP, Said That The Program “Continues To Fall Short Of Any Meaningful Standard Of Success.” “The program has faced sharp criticism. Neil Barofsky, the departing special inspector general overseeing the program, has faulted the administration for launching it with inadequate analysis and only partially developed guidelines. This led to delays and confusion, and the program ‘continues to fall short of any meaningful standard of success,’ he said a report released in January.” (Alan Zibel and Louise Radnofsky, “Only 1 In 4 Got Mortgage Relief,” The Wall Street Journal, 2/28/11)

The Congressional Oversight Panel Slammed The Treasury Department’s 
Management Of The Auto Bailouts

Congressional Oversight Panel: Treasury’s “Differing And Conflicting Goals” Call Into Question Whether The “Interventions In The Auto Industry Should Be Called Successful.”  “These differing and potentially conflicting goals make it difficult to determine whether the TARP’s interventions in the auto industry should be judged to be successful. Instead, the articulation of multiple goals, without specification of their priority, allows Treasury to claim success if the program achieves any one of these goals.” (“The Final Report Of The Congressional Oversight Panel,” Congressional Oversight Panel, 3/16/11)

Congressional Oversight Panel: Treasury Has “Never Articulated A Clear Set Of Goals” For The Auto Bailouts. “Treasury, however, has never articulated a clear set of goals for these programs. Instead, it has articulated a number of goals at different times, many of which may ultimately be conflicting.” (“The Final Report Of The Congressional Oversight Panel,” Congressional Oversight Panel, 3/16/11)

Treasury’s Bungling Of The General Motors IPO “Essentially Locked In A Loss Of Billions Of Dollars.” “The report questions Treasury's decision to sell so much of its stake in General Motors (GM) during the automaker's successful initial public offering in November, saying the decision ‘essentially locked in a loss of billions of dollars and thus greatly reduced the likelihood that taxpayers will ever be repaid in full.’” (Chris Isidore, “Auto Bailout's Estimated Cost To Taxpayers: $19 Billion,” CNN Money, 1/13/11)

Geithner Infamously Welcomed The Nation To The Recovery Last August

Geithner Op-Ed In The New York Times: “Welcome To The Recovery.” (Timothy Geithner, “Welcome To The Recovery,” The New York Times, 8/2/10)

Geithner: “[A] Review Of Recent Data On The American Economy Shows That We Are On A Path Back To Growth.” (Timothy Geithner, “Welcome To The Recovery,” The New York Times, 8/2/10)

  • Geithner: The White House’s Actions Have Put The Economy On The Road To Recovery. “The recession that began in late 2007 was extraordinarily severe, but the actions we took at its height to stimulate the economy helped arrest the freefall, preventing an even deeper collapse and putting the economy on the road to recovery.” (Timothy Geithner, “Welcome To The Recovery,” The New York Times, 8/2/10)

But The Latest Figures Make It “Very Clear That There Is No Recovery To Speak Of”

“GDP Just Missed Expectations At 1.3%. Analysts Were Looking For 1.8%. Even Worse, Perhaps: Q1 GDP Was Revised From 1.9% All The Way Down To 0.4%, Which Is Stunning.” (Joe Weisenthal, “BAD: GDP Misses Estimates At 1.3%,” Business Insider, 7/29/11)

  • CNBC’s Jim Cramer: “It’s Very Clear That There Is No Recovery To Speak Of.” (CNBC’s, “Squawk On The Street,” 7/29/11)
  • MSNBC’s Simon Hobbs: “These Are Shocking, Shocking Figures; It Means That The Economy Is Nowhere Near Growing Fast Enough To Bring The Unemployment Rate Down.” (MSNBC’s, “Morning Joe,” 7/29/11)

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