S&P: $4 Trillion is Only a Start (and certainly not enough)

S&P: $4 Trillion is Only a Start ^ | July 28, 2011 | FOXBusiness

[MontaniSemperLiberi]

FOX News’ Brett Baier, James Rosen and Mike Emanuel caught this interesting disclosure S&P sovereign-rating chief John Chambers made on a conference call today. FOX Business’s Peter Barnes caught this tip, too.

The “webinar was held for investors on state and local governments and pension issues,” says an S&P spokesman.

Here was the question to S&P exec John Chambers, and his reply:

Q: “There's been a figure of $4 trillion dollars circulating as an example of the scope of fiscal consolidation measures that could work to stabilize the U.S. debt-gdp ratios. Could you explain how that figure was arrived at since it was mentioned in S&P's reports and where it figures in S&P analysis?"

A: “First of all, that figure comes initially from the Bowles-Simpson fiscal commission, and it was embraced by President Obama in his April 13 speech and Paul Ryan in his counter-budget proposal. And so you had policy makers converging around the amount. Now actually the $4 trillion, depending on whether it is front-loaded or back-loaded, is not going to do the trick in terms of stabilizing U.S. government debt-to GDP ratios. But it takes you pretty far along. And I think a grand bargain of that nature would signal, you know, the seriousness of policy makers to address the fiscal issues of the United States, to actually stabilize the debt-to-GDP. The IMF says it takes 7.5% of GDP consolidation. I think we have more than that."

The U.S. annual budget deficit is now around 9% of GDP.

Chambers adds: “But $4 trillion would be a good down payment. We thought that..if policy makers could deliver the goods on that, then that would be a strong sign on our political scores and eventually on our projections on the fiscal side.”

[MontaniSemperLiberi]

$4T is not even close. R's and D's are arguing over perception right now. Not reality. The reality is that we need to balance the budget very soon (two to five years) and without the help from optimistic growth scenarios that the CBO and OMB use.

What Chambers is clear about is what they are looking for is the willingness of Democrats to help get the deficit under control. They won't be satisfied with a long term plan forced through by Republicans. Either a short term plan forced by Republicans or a front loaded long term bipartisan plan would be acceptable.

[AndyJackson]

The U.S. annual budget deficit is now around 9% of GDP.

The problem is the deficit compared to tax revenue, keeping in mind we are not a lightly taxed people.

[EagleUSA]

I personally am praying for a downgrade. This country needs it, and it will sit squarely on the shoulders of Obama and his socialist ilk. It will also reflect upon the sickening weakness and incompetence of the Republican party.

The system is coming down. To what degree is the question. Regardless, the country had better escourt Obama to the White House door in the 11/2012 vote or we are finished. We need a FIGHTING CONSERVATIVE to be the core of the campaign and Obama can be soundly beaten.

[tennmountainman]

Neither of these bills come close to 4 trillion. So, the downgrade is coming, regardless. Hell will break out when that happens. 2012 will shape up to be a “Throw The Bums Out” on both sides elections.

[mardi59]

How about getting rid of Howdy Doodys 36 speech writers, all of his Czars, 1/2 of his wifes sstaff and cut his usage of AF1 down drastically. He said “share” so it’s a start.

[jafojeffsurf]

True and it needs to happen before all these BS bills go through. We need real change and this is overdue. I dare say it was held back on purpose, political reasons.

Do it now and let people get a better understanding of how bad things are and how bad they are going to get.

[cashless]

So who was the S&P dimwit that testified before Congress yesterday and told the sponges on the lectern that either Reid's or Boehner’s plan was OK to avoid a downgrade? S&P should stay out of politics with their track record of rating. They downgraded Bear, Sternes after they went bankrupt. The dirty secret is that S&P, Moody's, and Fitch are paid by the companies they rate which is a HUGE conflict of interest and are managed by members of the ruling class. They are truly whores IMO. Want more examples? Fannie Mae, Freddie Mac, Sallie Mae, Ginnie Mae, and all the five major banks that have toxic mortgages yet to be written off and an even larger exposure to risky derivatives than before the first bank bailout, some as many as 10 times more. Now investors are lied to. It's all part of the script written by the ruling class to continue their theft of the country class.

[ken21]

boehner’s not even serious.

[RC2]

How about if we add the $9 Trillion that the Federal Reserve doesn’t know where it’s at? Isn’t anyone curious?

[ken21]

boehner’s not even serious.