So, I made the mistake of watching failed Republican House Speaker Newt Gingrich and failed Republican CEO Carly Fiorina last night on Crossfire, and I was struck by how both of them were playing this cute “deficit reduction” game whereby we pretend that the biggest problem American families face today is the deficit.
The biggest problem American families face today is paying their bills and saving for their future in a weak economy that was only made weaker by past and recent Republican hostage-taking.
Which brings us back to failed GOP Senate candidate Fiorina, who was once called the 19th worst CEO of all time. Fiorina, who was fired as the CEO of HP, was sent packing with a $40 million severance package. So it’s no wonder Fiorina isn’t terribly interested in the problems of the little people, and is more interested in cutting government. Fiorina is happy to chop away at excess, so long as it’s not her own.
Now back to Crossfire. Fiorina had an interesting exchange with former Obama economist Austan Goolsbee, in which Fiorina tried to justify the Republican party’s obsession with cutting government spending by mal-splaining how the US’ credit rating got downgraded the last time the Republican party took the economy hostage.
Fiorina: The reality is that when our credit rating was dropped for the first time in our history, they weren’t just talking about a failure to meet a deadline, they were talking about an unsustainable debt to GDP ratio, and no observable progress in how that was ever gonna get solved, and that hasn’t changed.
A failure to meet a deadline? She’s talking about her own party’s threat to force the United States to default on the national debt and risk sending the entire world into a massive depression. How cute of Fiorina to minimize the GOP’s hostage-taking of our economy by making it sound like you were late handing in a paper at school.
Here’s what S&P actually said at the time, via Politico:
A Standard & Poor’s director said for the first time Thursday that one reason the United States lost its triple-A credit rating was that several lawmakers expressed skepticism about the serious consequences of a credit default — a position put forth by some Republicans.
Without specifically mentioning Republicans, S&P; senior director Joydeep Mukherji said the stability and effectiveness of American political institutions were undermined by the fact that “people in the political arena were even talking about a potential default,” Mukherji said.
“That a country even has such voices, albeit a minority, is something notable,” he added. “This kind of rhetoric is not common amongst AAA sovereigns.”
S&P did add something about the debt to GDP ration, but they did not say, as Fiorina alleged, that “they were talking about an unsustainable debt to GDP ratio.” S&P wanted to see the debt to GDP ratio stabilize. That’s different than saying the current level is unsustainable.
S&P’s Mukherji said the trajectory and amount of deficit savings factored into the downgrade decision, along with the slow response to the potential crisis by the nation’s leaders.
“What S&P wanted to see from the deal was a stabilization in the debt-to-GDP ratio over time,” he said. “We wanted to see something other than a line that kept going up. That’s what we didn’t see.”
As for the amount of savings, Goolsbee has more on that from last night:
Goolsbee: If you look at Simpson-Bowles, if you look at Simpson-Bowles, we have actually as a country, partly through good fortune, that health care cost inflation has been lower than they predicted it would have been, partly from sequester, partly from new revenues, we’ve actually done almost three-quarters of the amount of deficit reduction that Simpson-Bowles said we needed to do. And the government spending and deficit levels are shrinking at the fastest they’ve shrunk in something like 70 years. So the question is why is it that you think the most important thing we should do right now is go figure out how to cut the deficit even farther. I think what we need to do is grow. We need to stop with this, this is crazy.
Good question. The answer is the same one that explains why the Republicans shut down the government – they don’t particularly like government, so they do all they can to take an axe to it, whenever they can, and for whatever reason. If the GOP were actually so worried about deficits, they’d have spoken up when both Ronald Reagan and George W. Bush broke the bank, and they didn’t.