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US Credit Downgraded, Obama Economic Adviser Blames ‘Questionable Mathematics’

August 8, 2011 by  

US Credit Downgraded, Obama Economic Adviser Blames ‘Questionable Mathematics’

On Friday, Standard & Poor’s Ratings Services (S&P) lowered its long-term sovereign credit rating on the United States from AAA to AA+.

“The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics,” read a report released by the ratings agency. “More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges… The outlook on the long-term rating is negative.”

Moreover, the report also contained further warning of another possible downgrade: “We could lower the long-term rating to ‘AA’ within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case.”

Departing White House Economic Adviser Austan Goolsbee claimed S&P’s downgrade of the U.S.’s sovereign credit rating was based on “questionable mathematics” on NBC’s Meet the Press on Sunday, according to POLITICO.

“They made a $2 trillion math error, and they didn’t check their work,” Goolsbee said.

The $2 trillion figure comes from a draft press release provided to the Treasury by S&P before the downgrade was made official. In a blog post, Acting Assistant Secretary for Economic Policy at the Treasury, John Bellows, explained the alleged error and S&P’s decision to continue with the downgrade when Treasury pointed out the error.

“The error came about because S&P took the amount of deficit reduction CBO [Congressional Budget Office] calculated from the Budget Control Act and applied it to the wrong starting point, or ‘baseline,’” the blog read. “The impact of this mistake was to dramatically overstate projected deficits — by $2 trillion over 10 years. As anybody who has followed the fiscal discussions knows, a change of this magnitude is very significant. Nonetheless, S&P did not believe a mistake of this magnitude was significant enough to warrant reconsidering their judgment, or even significant enough to warrant another day to carefully re-evaluate their analysis.”

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  • simian pete

    HA HA HA HA! Them politicians REALLY screwed up this time !! I’m referring to that debt deal COngress & The President made.. HA HA HA !
    WHat a bunch of LOSERS !!! Thanks you Congress and Mr. President.

  • s c

    Who’s in the White House NOW? WHo’s supposed to be our #1 leader? Who supposedly had “everything” it took to move into the W H and make America a great country?
    Now that we have THAT FACT established, this is the same place to point every accusing finger. The #1 screw-up in America is in the W H. WHO doesn’t have answers? WHO isn’t a leader? WHO has done more harm to America than an invading Army?
    He’s in the W H. You can’t have it both ways, Anointed One. Enjoy it while it lasts. Let your pals manipulate every poll in existence. This disaster is in your lap. You can still resign, but I doubt very much if your 200 pound ego will let you do it.
    The only thing left for you to do now (if you don’t already do it) is to pray to yourself before you go to bed at night.

  • Dan az

    Click here to view this email as a web page
    Newsmax.com

    Insider Report from Newsmax.com

    Headlines (Scroll down for complete stories):
    1. Fuel Economy Standard ‘Kills People’
    2. China Attacks U.S. on Debt Debate
    3. Environmentalists Blamed for Deadly Bedbug Plague
    4. Iran’s Revolutionary Guards Commander to Head OPEC
    5. U.S. Customs: 500,000 Troops Needed to Seal Border

    ‘This Is Your Bible’ — Dow Jones
    Millions have already heard the prophetic warnings of a 2012 economic meltdown. Will you be prepared? Click Here to See the Evidence.

    1. Fuel Economy Standard ‘Kills People’

    The Obama administration on July 29 announced a new fuel economy standard that requires automakers to boost their fleets’ miles per gallon by 5 percent a year until they reach 54.5 mpg by 2025.

    The standard is designed to save thousands of dollars in fuel costs over the life of a vehicle, but critics say it will have another effect: a rise in motor vehicle deaths.

    The president reportedly has secured agreements from General Motors, Ford, Chrysler, Honda and Hyundai to raise the Corporate Average Fuel Economy (CAFE) to 35.6 in 2016 and to the higher figure nine years later, although the standard will be reviewed in 2018.

    To increase their vehicles’ fuel economy, automakers will have to reduce their weight.

    “So prepare to say goodbye to sport utility vehicles, pickups and minivans, the very vehicles millions of American families and businesses must rely upon every day,” the Washington Examiner observed in an editorial.

    “By far the worst result, however, will be the fact that thousands will die because Obama, fanatical Big Green environmentalists, and their allies in the federal bureaucracy care more about removing micro-amounts of emissions than they do about the safety and convenience of people on the roads.”

    Sam Kazman, general counsel of the Competitive Enterprise Institute, a nonprofit think tank, called CAFE “a regulation that, plain and simple, kills people.”

    A National Highway Traffic Safety Administration study in 2003 estimated that for every 100 pounds of weight removed from a car weighing under 3,000 pounds, the death rate rises more than 5 percent.

    A study by the National Academy of Science found that lighter vehicles required to satisfy CAFE — which was first enacted in 1975 — were responsible for up to 2,600 highway deaths a year.

    And data from the government’s Fatality Analysis Reporting System, analyzed by USA Today, concluded that 7,700 people died for every one additional mpg attributed to CAFE regulation.

    The Examiner concludes: “If CAFE standards were produced by a public corporation or small business instead of the federal government, the families of those killed by the regulations would have a prima facie case for a class-action lawsuit.”

    Editor’s Note:

    * Small Group of U.S. Doctors Curing Cancer

    2. China Attacks U.S. on Debt Debate

    The Chinese government’s official mouthpiece has published a commentary attacking the United States for its handling of the debt crisis.

    The opinion piece published on Xinhua, the state-run news wire, chided the U.S. for its “debt addiction” and said it was “time for Washington to revisit the time-tested common sense that one should live within one’s means.”

    The commentary went on to say that American politicians need to “conduct an in-depth self-examination” and decide how to “shake off electoral politics and get difficult jobs done more efficiently.”

    The article also called the battle between Democrats and Republicans over how to resolve the debt ceiling crisis “dangerously irresponsible.”

    The prospect of a U.S. debt default unnerved global investors because it would hobble the global economy and roil financial markets by raising bond yields and borrowing costs, a point stressed by Xinhua.

    China is the largest foreign holder of U.S. government debt, with an estimated 60 to 70 percent of its $3.2 trillion foreign exchange reserves in American assets.

    The Financial Times observed: “China has little choice but to continue investing in U.S. assets because no other market is big enough to support its purchases.”

    Editor’s Note:

    * Newsmax Wake-Up Call: Get Our Millionaire Success Kit 100% FREE

    3. Environmentalists Blamed for Deadly Bedbug Plague

    Government policies on the use of pesticides have led to a resurgent population of bedbugs — including some that carry a deadly antibiotic-resistant germ.

    Bedbugs had been almost completely eradicated in the United States for half a century through the use of the now-banned pesticide DDT, but their population has grown rapidly during the past decade, overwhelming hotels, hospitals, schools, and apartment buildings, according to a report from the Heartland Institute.

    Canadian researchers have recently discovered bedbugs carrying methicillin-resistant Staphylococcus aureus (MRSA). MRSA is a bacterial infection that is highly resistant to some antibiotics and can be deadly if it reaches the bloodstream.

    H. Sterling Burnett, a senior fellow with the National Center for Policy Analysis, blames the bedbug resurgence on “poor policy decisions.”

    He told Heartland Institute: “Most households have never seen a bedbug before now. But in the early 1970s, the government banned the pesticide DDT, and now we’re seeing bedbug infestations in European and North American cities.

    “This is another legacy of Rachel Carson’s ‘Silent Spring,’ the 1962 book credited with starting the environmental movement, leading to the ban of DDT.

    “By banning DDT, we’ve killed people in developing countries through the spread of malaria. Now we’re subjecting the U.S. population to bedbugs and other pests and vermin.

    “Government should lift the ban on DDT and other pesticides that are effective in treating pests like bedbugs.”

    Angela Logomasini, director of risk and environmental policy with the Competitive Enterprise Institute, agrees.

    “We had eradicated bedbugs in the past, then we banned DDT for home use, and now they’re back. I think this policy needs to be reevaluated.”

    She also said, “We need a better regulatory environment. Rather than removing products from the shelves, which is where we are today because of the precautionary principle, more evaluation and experimentation is needed.”

    Editor’s Note:

    * ALERT: These 4 Things Happen Right Before a Heart Attack

    4. Iran’s Revolutionary Guards Commander to Head OPEC

    In what Iran is touting as a “blow to the West,” a senior official with the nation’s Islamic Revolutionary Guard Corps is taking over as the new head of the OPEC oil cartel.

    Iranian President Mahmoud Ahmadinejad named as his oil minister Brig. Gen. Rostam Ghasemi, who heads Khatam al-Anbia (KAA), an industrial giant owned by the Revolutionary Guards, and he was approved by Iranian lawmakers on Wednesday.

    Ghasemi’s position as oil minister means he will preside over OPEC meetings this year, because Iran holds the rotating presidency of the 12-country cartel.

    KAA has been targeted for international sanctions for activities relating to Iran’s nuclear program, the Guardian reported.

    Ghasemi himself was added to the U.S. Treasury Department’s list of Specially Designated Nationals whose assets are frozen. Ghasemi cannot do business with Americans.

    A Revolutionary Guards spokesman called the approval of Ghasemi as oil minister “a meaningful and crucial response to the attacks against the Guards from the West’s media empire.”

    And an Iranian lawmaker was quoted as saying a vote for Ghasemi would be a vote for Iran’s “history of resistance.”

    Britain’s Telegraph observed that “the fate of world oil prices could rest in the hands of a man who has devoted his whole life to opposing the West. Oil prices are high enough as it is, and the prospect of Iran using oil prices to hold the world to ransom is something that should give all of us sleepless nights.”

    OPEC’s 12 nations, including Saudi Arabia and Iraq, account for about 79 percent of the world’s crude oil reserves and 44 percent of world production.

    In 1973, Arab members of OPEC placed an embargo on oil exports to the United States and Western Europe in response to the West’s resupply of Israel during the Yom Kippur War.
    so we can expect higher gas prices very soon now and if thats not enough check out this site that says Iran is about to knock out our power grid.
    http://www.wnd.com/?pageId=329977

  • Dan az

    Interesting time to say the least!

  • Thinking About

    Are you talking about the Iran which had our safety valve in place as long as Sadam was in power set up by our CIA? Wonder why we are so worried about them now. Also who was responsible for voting on the increase in the debt ceiling? Where was the members of Congress when warnings was going out of what would happen if we went up to the wire in this? From the actions of some members they thought the discussion was budget planning. If the tea party was successful on electing every office this mess they was so insistent on creating will be theirs to fix. What happpened to smart intelligent Congress members who knew and understood reactions and what would the reaction be. It is time to remove the heads and replace them with those who works.

  • s c

    Non-think, let’s take a little trip back into history. At the end of WWII (yet another Democrat war), HST [Truman, in case you're not sure] had a bunch of small caliber rifles and ammunition out in the Pacific. A guy in SE Asia was sorely in need of whatever he could get, so HST, the consummate ‘helper,’ gave that guy MUCHO small caliber rifles and ammunition. The name of the guy and the significance of the deed?
    Why, it was none other than Ho Chi Minh. Does that name ring any bells, comrade?
    Just so no one accuses me of being ‘off topic,’ I find it hard to have faith in anyone who can make a 2 trillion dollar mistake and laugh it off. Is this what economic geniuses do at the W H?
    Feel any smarter, now, bunkie?

  • jopa

    The number one screw ups in Washington are the Tea partiers and the Republican party.Playing around with the debt ceiling and the losses on Wall Street is costing Americans billions in losses on their portfolios.Anyone with a retirement plan, mortgage or even just a credit card is going to pay dearly for the ignorance of the newbies in DC.It’s just not Karl Rove and the Koch brothers taking down America, you also have power hungry politicians like Eric Cantor the cheer leader for the new members of Congress that do not know how Washington works.In today’s world everything that is being said and done is like a shot heard around the world and our political climate being so fragile is what led to our AA+ rating.I guess the numbers today prove Michelle Bachman and some writers on this site wrong when they claimed playing around with the debt ceiling was no big issue.

  • Dan az

    Both of you guys need to watch something its called inside job it explains who is who and were they are now.Your buddy hired them to continue this mess that they created.So if you want to really see the truth rent this documentairy form net flix and learn something.I know that you would love to blame someone else but after you watch this then even you would have a hard time twisting the truth.

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