Ratings firm Egan-Jones cut its credit rating on the U.S. government to “AA-” from “AA,” citing its opinion that quantitative easing from the Federal Reserve would hurt the U.S. economy and the country’s credit quality.
The Fed on Thursday said it would pump $40 billion into the U.S. economy each month until it saw a sustained upturn in the weak jobs market.
In its downgrade, the firm said that issuing more currency and depressing interest rates through purchasing mortgage-backed securities does little to raise the U.S.’s real gross domestic product, but reduces the value of the dollar.
In turn, this increases the cost of commodities, which will pressure the profitability of businesses and increase the costs of consumers thereby reducing consumer purchasing power, the firm said.
In April, Egan-Jones cuts the U.S. credit rating to “AA” from “AA+” with a negative watch, citing a lack of progress in cutting the mounting federal debt.
Moody’s Investors Servicecurrently rates the United States Aaa, Fitch rates the country AAA, and Standard & Poor’s rates the country AA-plus. All three of those ratings have a negative outlook.
Could this have anything to do with the decision to print $40 billion a month to “stimulate” the economy? Once you’ve given up on letting businesses create jobs by lowering their taxes and removing burdensome regulations, then printing money is all you have left. But no one mistakes that for economic growth, least of all credit rating agencies.
Declining U.S. labor force (structural unemployment/government dependency)
Labor force participation rate
Unemployment/population ratio
Average hourly earnings of workers
GDP growth
Economic competitiveness
Federal debt crisis
Risk of renewed recession
And here’s the detail of one that I haven’t mentioned much before on this blog:
5. Average hourly earnings were unchanged in the August jobs report, and are up just 1.7% over the past year. Not only does that match the slowest pace on record, but one you account for inflation, wages are flat to down.
The graph:
Average hourly earnings for workers way down under Obama
New income data from the Census Bureau reveal what a great job Barack Obama has done for the middle class as President. During his entire tenure in the oval office, median household income has declined by 7.3%.
In January, 2009, the month he entered office, median household income was $54,983. By June, 2012, it had spiraled down to $50,964. That’s a loss of $4,019 per family, the equivalent of losing a little less than one month’s income a year, every year. And on our current course that is only going to get worse not better…
[…]Three years into the Obama recovery, median family income had declined nearly 5% by June, 2012 as compared to June, 2009. That is nearly twice the decline of 2.6% that occurred during the recession from December, 2007 until June, 2009. As the Wall Street Journal summarized in its August 25-26 weekend edition, “For household income, in other words, the Obama recovery has been worse than the Bush recession.”
[…]Obama has failed the poor as well as the middle class. Last year, the Census Bureau reported more Americans in poverty than ever before in the more than 50 years that Census has been tracking poverty. Now The Huffington Post reports that the poverty rate is on track to rise to the highest level since 1965, before the War on Poverty began. A July 22 story by Hope Yen reports that when the new poverty rates are released in September, “even a 0.1 percentage point increase would put poverty at the highest level since 1965.”
Gateway Pundit adds:
Barack Obama is not just the food stamp president.
A record one in seven Americans is on food stamps today thanks to Barack Obama.
Barack Obama is also the poverty and pain president.
Under Obama, 6.4 million Americans are living below the poverty line and there is a record number of Americans living in deep poverty.
Moody’s Investors Service said Tuesday that it would probably cut its triple-A rating on U.S. government debt by a notch unless congressional leaders can strike a budget deal in the coming months to bring down the deficit.
“If those negotiations lead to specific policies that produce a stabilization and then downward trend in the ratio of federal debt to GDP over the medium term, the rating will likely be affirmed,” Moody’s said in a press release Tuesday. “If those negotiations fail to produce such policies, however, Moody’s would expect to lower the rating, probably to Aa1.”
The threat comes after one of the other big three ratings firms, Standard & Poor’s, downgraded the U.S. last year following the brawl in Washington over the debt ceiling.
This would be the second credit downgrade – both occurred because of Obama’s Marxist policies of “spreading the wealth around” to punish job creators and their employees.
Are you better off now than you were four years ago?
Here are the raw numbers from the non-partisan Congressional Budget Office, as reported by CNS News:
The Congressional Budget Office (CBO) is projecting that if changes in federal taxing-and-spending policies already enacted and set to take effect at the beginning of next year do in fact take place, the unemployment rate will climb to 9.1 percent.
[…]Widely referred to as the “fiscal cliff,” the expiration of the Bush tax cuts and over $1 trillion in automatic defense and discretionary cuts as a result of last year’s failed budget deal are set to take effect in January 2013.
[…]If no action is taken by Congress, current CBO projections show that unemployment will not return to pre-recession levels until 2017.
Under current law, federal health care spending is on pace to exceed all discretionary spending by 2016, according to the Congressional Budget Office (CBO).
The change is due to large increases in Medicare and Medicaid spending and added spending under the Affordable Care Act (Obamacare) over the next decade, a feat the Tax Foundation calls a “truly unprecedented and scary” scenario.
The nonpartisan tax research group analyzed recent CBO projections of the budget for 2012 to 2022, finding that over the next decade Medicare spending will increase from $550 billion to $1.064 trillion, while Medicaid would more than double from $253 billion to $592 billion.
In addition, new exchanges and subsidies under Obamacare will force mandatory healthcare expenditures to grow from $25 billion to $181 billion in 2022.
“In total, healthcare entitlement spending is due to more than double, from $828 billion this year to $1.837 trillion in 2022,” according to the Tax Foundation.
“This means healthcare spending will overtake all discretionary spending in 2016 – Obama’s last year in office if reelected,” the group said.
The amount of money the federal government takes out of the U.S. economy in taxes will increase by more than 30 percent between 2012 and 2014, according to the Budget and Economic Outlook published today by the CBO.
At the same time, according to CBO, the economy will remain sluggish, partly because of higher taxes.
“In particular, between 2012 and 2014, revenues in CBO’s baseline shoot up by more than 30 percent,” said CBO, “mostly because of the recent or scheduled expirations of tax provisions, such as those that lower income tax rates and limit the reach of the alternative minimum tax (AMT), and the imposition of new taxes, fees, and penalties that are scheduled to go into effect.”
The U.S. economy, CBO projects, will perform “below its potential” for another six years and unemployment will remain above 7 percent for another three.
Now you might expect that the Democrats would have some bold plan to tackle unemployment, spending and high taxes. And they do!
Bold policy ideas at the Democrat National Convention
Take a look at this video on bold, innovative tax policy from the DNC convention:
That will fix unemployment for sure.
And they want to augment that tax policy with some reasonable pro-growth regulations:
If you don’t think that this is a good plan to solve our economic problems, then Democrats will say that you’re a racist homophobic Islamophobic sexist bigot.
WINTERY KNIGHT 