Standard & Poor’s shocker announcement that U.S. credit ain’t what it used to be was behind yesterday’s stock market tumble. Was the timing of the announcement political? That is what the administration’s top economist Austan Goolsbee has charged.
Noting that the S & P analysis had no new figures and that there was no economic trigger for the announcement, the Wall Street Journal nevertheless concurs-but not quite in the way Goolsbee would like:
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 harshness of Mr. Obama’s anti-Republican rhetoric and the universal conclusion that this was a Presidential campaign speech make it very difficult for GOP Congressional leaders to believe they can enter into a budget negotiation in which the White House will deal in good faith.
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.
S&P, as did many others, said it saw the Obama and Ryan budget proposals “as the starting point of a process,” but “That said, we see the path to agreement as challenging because the gap between the parties remains wide.” And: “We believe there is a significant risk that Congressional negotiations could result in no agreement.” And this stalemate will continue “over the next two years.”
S&P is simply connecting the political dots after last week’s un-Presidential tirade against the GOP.
If you are on my side of the political debate, you are tempted to see the president’s response, particularly the Wednesday speech as unserious and too political for a president at this point in his term. But if you agree with me that higher taxes are the end, not the means, The Speech takes on a new and serious meaning: Obama is going to hold firm in the hope of creating a new society that puts your earnings where the government thinks it should go.
This is the essence of Obama’s promised “fundamental change,” in my opinion.
The result, as S & P indicated, is going to be stalemate until somebody puts his hand on the Bible one day in 2013. Then we’ll know where we are going.