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ThePlumLIneGS whorunsgov plumline
Posted at 12:12 PM ET, 08/06/2011

Standard and Poors versus Mitch McConnell

Putting aside the question of whether we should accord any credibility to Standard and Poors’ downgrade, it’s hard to see how conservatives can claim S & P’s report as a political victory when it says this:

The political brinksmanship of recent months highlights what we see as America’s governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy.
Despite this year’s wide-ranging debate, in our view, the differences between political parties have proven to be extraordinarily difficult to bridge, and, as we see it, the resulting agreement fell well short of the comprehensive fiscal consolidation program that some proponents had envisaged until quite recently. Republicans and Democrats have only been able to agree to relatively modest savings on discretionary spending while delegating to the Select Committee decisions on more comprehensive measures. It appears that for now, new revenues have dropped down on the menu of policy options. In addition, the plan envisions only minor policy changes on Medicare and little change in other entitlements, the containment of which we and most other independent observers regard as key to long-term fiscal sustainability.

In other words, S&P explicitly cites the use of the threat of default as leverage for policy ends as a sign that American governance is becoming dangerously unstable and unpredictable. But folks, Mitch McConnell has repeatedly said that use of default this way is a good thing. McConnell said this:

“I think some of our members may have thought the default issue was a hostage you might take a chance at shooting. Most of us didn’t think that. What we did learn is this -- it’s a hostage that’s worth ransoming. And it focuses the Congress on something that must be done.”

McConnell also said this is something that should happen again in the future:

“What we have done, Larry, also is set a new template. In the future, any president, this one or another one, when they request us to raise the debt ceiling it will not be clean anymore. This is just the first step. This, we anticipate, will take us into 2013. Whoever the new president is, is probably going to be asking us to raise the debt ceiling again. Then we will go through the process again and see what we can continue to achieve in connection with these debt ceiling requests of presidents to get our financial house in order.”

In fairness, the S & P report does rap policymakers for not taking the need to cut entitlements seriously. Whether we accept S & P’s evaluations as credible or not, that aspect of the report does implicitly criticize Dems who have sought to draw a hard line on Medicare and Social Security. But the report also faults the GOP’s unwillingness to consider revenue hikes, too.

I assume that some on the right will argue that Democrats and the White House also used the threat of default as leverage for policy ends. But the simple fact is that at the outset of this fight, they repeatedly insisted that a “clean” debt ceiling hike was preferable for the good of the country, and it’s clear they would have preferred that outcome.

By contrast, the leader of Senate Republicans continues to claim that the use of the threat of default to leverage policy ends is a good thing that should be employed again in the future. Even if you agree with McConnell’s assessment — as I’m sure many conservatives do — it’s still a matter of fact that the embrace of the debt ceiling as a weapon for policy ends is a primary reason S & P downgraded the U.S. credit rating. That seems like a rather important part of the story, wouldn’t you say? Will someone ask McConnell whether he stands by his claims in light of the S & P report?

Relatedly, don’t miss Steve Benen’s terrific big-picture deficit timeline, which sheds some much needed light on the larger context in which this latest news is unfolding.

By  |  12:12 PM ET, 08/06/2011

 
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