Truth or Consequences

The one wild card in the negotiations in the United States Congress to keep the U. S. from defaulting on its debt was the Grand Old Tea Party (GOTP).  Their members, or the most of them, it seemed, were never hesitant in saying they would never vote to raise the debt ceiling, no matter what. 

Yes, all sorts of warnings were being sounded left and right about what might happen if the debt ceiling wasn’t raised, but the GOTP never budged.  In fact, they all sounded pretty sure that these were scare tactics being used by the Democrats so they could raise the taxes on the poor, put-upon billionaires and multinational corporations of our land.  And they stood firm even when those warnings came from otherwise reliable sources such as the Wall Street Journal.

Rep. Michelle Bachman (R,-MN) was a good a speaker for the GOTP as anyone.  In one news conference she intimated that spending was more important to President Obama that getting our financial house in order and that even if the debt ceiling wasn’t raised, the nation wouldn’t go into default because we could “pay the interest on the debt”.  Rep. Bachmann was joined in these sentiments by fellow members of the GOTP Reps. Steve King (R-Iowa) and Louie Gohmert (R-Tex.)

Well, we might have thought that since the possibility of default was avoided by the last-minute deal reached on the 1^st of August, we wouldn’t have to worry about the dire consequences that most sober observers predicted should the nation not be able to meet its obligations, but we would have been wrong, because on August 5^th, Standard and Poor’s (S&P) downgraded the U. S.’s stellar triple-A credit rating down to double-A plus. 

You might remember S&P from its role in the financial meltdown of 2008.  They were the ones who rated Lehman Brothers as triple-A right before they went bankrupt. 

Well, if the GOTP thought there’d be no consequences by not raising the debt ceiling, we can only hope that those doubts have, by this time, been dispelled.  Because S&P gave as one of its chief reasons for downgrading the U. S.’s credit rating the political turmoil that surrounded the need to raise the debt ceiling.  They also mentioned the refusal to raise revenue, but we know how the GOTP feels about that.  They were willing to see far worse consequences, after all.

Yes S&P analysts have been cited for making a two trillion dollar mistake in adding up the U. S. debt, but even after they recognized this little faux pas, they felt they should nonetheless go ahead with their downgrade.  And as a result, one report on MSN’s web site said that financial markets around the globe had lost a total of some $2.5 trillion and that was before the New York Stock Exchange lost 635 points on Monday.  That translates to about 5.5% of its total value, by the way.

Well, this all bodes well for the future, huh?  There still are a few details, after all, to be worked out if an agreement is to be reached on how to cut the nation’s overall debt.  Still, the news wasn’t all bad.  The price of gold just reached $1700 an ounce and the nation does have all that gold stored away in Fort Knox.