Is it possible that the S&
P downgrading of U.S. debt will be the one thing to convince Republicans that some form of revenue growth, i.e., tax increases, must be a part of their plan for deficit reduction?Clearly the GOP in Washington has been adamant that the only approach they will consider is to slash and burn government programs while completely ignoring even a serious discussion about the revenue side. And so far they've had real success, as evidenced by the debt ceiling deal.
But then S&P came along and said, apparently with the kind of authority that the business minded Republicans feel uncomfortable ignoring, that revenues have to be in the mix.
In the S&P report there were several mentions of the damage being done to the economy by Republicans unwillingness to consider revenues.
With regard to the debt ceiling deal, S&P said the following:
- The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy.
- It appears that, for now, new revenues have dropped down on the menu of policy options.
- The act contains no measures to raise taxes or otherwise enhance revenues.
- The majority of Republicans in Congress continue to resist any measure that would raise revenue.
And, as ThinkProgress reports:
Standard & Poor's indicates that they could improve their rating for the U.S. if "the 2001 and 2003 tax cuts for high earners lapse from 2013 onwards," as the Administration is advocating.
It is perhaps not surprising then that House Budget Chairman Paul Ryan (R-WI) is now saying that he is open to revenue increases as part of a deal to reduce the deficit, which would be a significant change for the Republicans, who have so far been insistent that they would not support revenue increases.
As part of the debt ceiling negotiations, President Obama proposed several plans that would have cut $4 trillion in spending, but that would also have included modest revenue increases. Every time, the Republicans refused to go along.
In the short term, Republicans have been able to criticize Obama in the abstract, saying that it has been his poor stewardship that has lead to the S&P downgrade. But given the fact that S&P is laying much of the blame at the feet of the GOP for their rigidly ideological rejection of tax increases, the tide may be turning. The GOP may be starting to understand that the facts will clearly suggest they must shoulder much of the blame.
The American people expect politicians to work together for the best outcomes. As hard as the S&P report may have been for Obama this past weekend, the fact that Paul Ryan blinked on the topic of revenues may mean that the current logjam is busting open a bit.
Many of us have been screaming that Tea Party economics is not just bad for equity and fairness and social justice, but that it is also bad for the country's economy as a whole. So, Tea Partiers, if you don't want to listen to us, maybe you'll want to listen to S&P, who may be a lot harder to dismiss as a bunch of socialists out on the campaign trail.
They seem to have gotten Paul Ryan's attention.
(Cross-posted at Lippmann's Ghost.)