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A rebuttal to Obama's rebuttal to the S&P credit rating downgrade

On Monday, President Obama saw fit to reiterate the same tired talking points about the debt and deficit that he's been repeating ad nauseam for weeks and months now. I have some comments in response:

On Friday, we learned that the United States received a downgrade by one of the credit rating agencies -- not so much because they doubt our ability to pay our debt if we make good decisions, but because after witnessing a month of wrangling over raising the debt ceiling, they doubted our political system’s ability to act.

A month? Sure -- the decades of overspending by both Democrats and Republicans, leading to $14 trillion in debt had nothing to do with it. And neither did the last 3+ years of massive entitlement expansion and extension of the Bush war expenditures.

The markets, on the other hand, continue to believe our credit status is AAA.

He says as the markets plummet. On Monday -- the day on which Obama delivered this speech -- the Dow fell 600+ points for the 6th largest decline in history.

In fact, Warren Buffett, who knows a thing or two about good investments, said, “If there were a quadruple-A rating, I’d give the United States that.” I, and most of the world’s investors, agree.

Of course, Buffet doesn't have millions riding and stocks, and therefore has absolutely no interest in influencing the markets.

If you and Buffet and "most of the world's investors" agree that the US is "quadruple-A [rated]," then make the case. I'm waiting. In the mean time, the reaction of the markets seems to indicate that S&P does have some credibility in their minds.

As far as I'm concerned, the federal government of the US has no credibility on this front. Point to me one single thing that is stable about the U.S. economy. There is none, because the stability of any and all segments of the U.S. economy -- and much of the world economy -- are attached to the stability of the U.S. dollar and U.S. financial institutions. The dollar is continuously devalued by excessive printing, and the financial institutions are regulated by politicians and bureaucrats. Who wants any part of that? The only reason we're not in a lot more trouble is the status of the dollar as the world currency. But that won't last forever.

The fact is, we didn’t need a rating agency to tell us that we need a balanced, long-term approach to deficit reduction.

What does "balanced" mean? My guess is that it means a combination of tax increases and spending cuts. But who knows? As far as tax increases: the federal government shot that wad decades ago. It has no credibility left on that front. If tax increases are granted, the spending cuts will never come. The politicians will simply spend the additional revenue, and then some.

We knew from the outset that a prolonged debate over the debt ceiling -- a debate where the threat of default was used as a bargaining chip -- could do enormous damage to our economy and the world’s.

No -- the damage was done, and is being done, by the psychotic and irrational control that the federal government asserts over every aspect of public life. The "prolonged debate" wasn't even the straw that broke the camel's back -- the President's and the Democrat congress' desire to create a massive new entitlement, coupled with a paralytic inability to come up with a budget, was the straw.

With respect to debt, our problem is not confidence in our credit -- the markets continue to reaffirm our credit as among the world’s safest.

True... the rest of the world's credit tends to go down with, and in proportion to how tightly their economies are tied to, the US'. I'm sure they're very satisfied with that arrangement and have no desire to change it any time in the future.

What we need to do now is combine those spending cuts with two additional steps: tax reform that will ask those who can afford it to pay their fair share and modest adjustments to health care programs like Medicare.

Who are "who can afford it," and what is "their fair share?" Answer: whatever the politicians decide. If Obama gets his way, those tax increases will go straight into funding massive new entitlements -- not paying for existing ones. If you're gullible enough to fall for this B.S. then you are likely disassociated from any real understanding of the history of government.

Furthermore, we need more than "modest adjustments." Medicare, Medicaid, and Social Security are illegal ponzi schemes (or worse) that can only work to subvert the rule of law, enslave those that aren't fortunate enough to be part of the political class, and, ultimately, bankrupt the country.

Making these reforms .... [requires] compromise.

Compromise is exactly what passed last week. If the Republicans had had their way the problem would have been solved. I'll even allow, for discussion, that if the Democrats had had their way the problem would have been solved*. Compromise is what we got, and it failed miserably, as it always does. Compromise is what has gotten us to $14 trillion in debt, with no hope of solving the deficit problem.

[* but only in the short term -- the tax increases would have further stalled the economy, which would have resulted in reduced tax revenues, perhaps enough to undo the effect of any tax increases]

Let me go into this a little more deeply:

When the federal government of the United States was founded, it was constitutionally limited to a certain small set of functions. To maintain this limited scope the government was founded with three coequal branches (really four since congress is bicameral), each of whose interests were intended to be at odds, so that they wouldn't join up and work together in order to enact some function unless that function was so agreeable to both houses of congress and the executive, and legal according to the judiciary.

Over time, politicians realized that they could increase their ability to wield power by "compromising" with each other... "If you vote for X I'll vote for Y."

Over yet more time, politicians of both major parties effectively "compromised" their interests into legislative being -- each side compromising on issues that were of less interest to them. For the Republicans this meant giving in on spending decreases (which they really aren't interested in anyway) in order to get increased military expenditures... usually by way of deficit spending and issuance of sovereign debt. For the Democrats this meant giving in on tax increases in order to get increased entitlement/welfare expenditures... usually by way of deficit spending.

In the end, spending has been very successfully increased, while revenue has remained flat or decreased, both in the name of "compromise."

For the average person, what does this mean? Answer: a government that is very well capitalized -- on debt that you will have to pay back -- to kill people around the world (military), and to restrict liberty at home (nanny state).

[The problem is] the insistence on drawing lines in the sand, a refusal to put what’s best for the country ahead of self-interest or party or ideology.

Gee, that's funny, because I'm pretty sure the GOP cut, cap, and balance, bill, passed in the House, would have prevented a default, AND would have avoided a credit rating downgrade. If you really believe this statement, Mr. Obama, then shouldn't you have spoken out in favor of the Democrat-controlled Senate passing the bill?

More to the point, if what's best for the country is at odds with what some want, doesn't that behoove those with the country's interests at heart to draw lines in the sand? Doesn't doing what's best for the country require absolute principals be adhered to?

I understand that there are differences of opinion about what principals are important. This is the EXACT REASON government should have a small footprint in every day life. When government does something it necessarily forces a single viewpoint on everyone.

We should also help companies that want to repair our roads and bridges and airports, so that thousands of construction workers who’ve been without a job for the last few years can get a paycheck again.

Why? If they're unemployed that means there are too many construction workers out there. Do you really think you're doing someone a favor by deluding them into staying in a dead career? What happens when those government-created jobs are gone? All this will do is to delay the inevitable. The fact is that the housing bubble employed too many construction workers. The ONLY way to solve this over-supply of construction workers is to let the creative destruction of the market lead them to new careers... OR, if possible, to REAL, SUSTAINABLE construction work.

Markets will rise and fall, but this is the United States of America. No matter what some agency may say, we’ve always been and always will be a AAA country.

Just saying it doesn't make it true.... I don't think even the most naive among us believes this balled-faced assertion. Everything comes to an end. [anyway, doesn't Obama sound like he's appealing to "American exceptionalism" here?]

For all of the challenges we face, we continue to have the best universities, some of the most productive workers, the most innovative companies, the most adventurous entrepreneurs on Earth.

Entrepreneurialism is a natural human attribute that is expressed and exercised when it comes in contact with sufficient opportunity afforded by liberty. It does not come from some fantastical magical attribute of being a U.S. national. Government kills opportunity. The only reason we've had "the most adventurous entrepreneurs on Earth" is because -- even until recent history -- we've also had the most laissez-faire economic policies. No more. From crushing debt, to overbearing regulation, to a devalued currency, to a cultural atmosphere -- cultivated by progressive elitists in the armchairs of academia -- that hates entrepreneurial behavior, entrepreneurship is suffering mightily in this country.

What sets us apart is that we’ve always not just had the capacity, but also the will to act -- the determination to shape our future; the willingness in our democracy to work out our differences in a sensible way and to move forward, not just for this generation but for the next generation.

Don't try to define us together just because we live within the same pot of 300+ million individuals. The only thing that the 300 million inhabitants of the U.S. have in common is the federal government that tyrannizes them. Before that the common trait was the federal government that protected them from tyranny.

... ultimately, the reason I am so hopeful about our future -- the reason I have faith in these United States of America -- is because of the American people.

If you actually believed this then you'd be doing everything in your power to put more power into the hands of these people that you have so much faith in.