White House Criticizes Credit Downgrade
RENEE MONTAGNE, host:
Here now to talk to us about the politics of the debt downgrade is NPR's Cokie Roberts, with us most Monday.
Good morning, Cokie.
COKIE ROBERTS: Hi, Renee.
MONTAGNE: The Obama White House was very unhappy, and very open about its unhappiness, with this decision. It tried to forestall it, but S&P went forward anyway. What now for the Obama administration?
ROBERTS: Well, first, the secretary of the Treasury, Tim Geithner, announced that he will stay through the election. He was eager to get back to his family in New York. So he now has to stick around.
But look, there are lots of reasons for them to be angry. There was a $2 trillion math error in the original S&P report. And then when they recognized it, they basically changed their rationale, from an economic one to a political one - that is, that the debt deal is not good enough, and they dont believe the American political system can fix the debt.
There were lots of particulars in it to make each party unhappy, and yesterday we heard members of each party highlight the part that worked for them. So the Republicans focused on the fact that the S&P report said there was not likely to be enough entitlement reform, and the Democrats focused on the fact that the report said that they didn't believe that the Bush tax cuts would be allowed to die, and S&P thought that that would be a good thing, to let them expire.
But what's got both parties really kind of irritated is that S&P did make a political judgment rather than a straight economic one. And they don't like the idea that apparently, these credit raters are deciding the French political system is more likely to work than the U.S. one.
MONTAGNE: Well, what about that? I mean, even S&P said yes, it was really a lot about the politics of this country. I mean, what - how does that fit?
ROBERTS: Well, I they had a conference call on Saturday, and I called in on it, and they made no bones about it, that they were making a political judgment. They're essentially saying they don't believe that the congressional supercommittee, still to be named, will do the job on the debt that it's assigned to do. And after listening to the partisan responses yesterday, there is reason to agree with S&P on that.
And then overnight, Renee, we had news that former Oregon Senator Mark Hatfield had died. And it reminded us of how few lawmakers like him are around now, who could do a deal like that. But having said that, there's still a lot of upset here, that S&P is engaging in what amounts to political punditry and can affect the U.S. economy with its punditry. And there's not a huge sense that they're calling it straight. Some sense that they're making political judgments for political reasons.
MONTAGNE: Well, if in fact it's a bit of that, or much of that, if there's a partisan political agenda, is it that S&P execs are doing this to harm President Obama?
ROBERTS: You're not hearing that. I mean, some Democrats say that because they see conspiracies behind every bush. But it's much more that - people saying this is S&P payback for being called over the coals by the administration for their role in the economic crisis. You just heard Chris Arnold referring to that.
The truth is, it was a congressional coal-raking as well. The Senate Permanent Committee on Investigations, in a totally bipartisan report on the economic crisis earlier this year, repeatedly blamed S&P and the other ratings agencies for being, quote, the single biggest triggers to the economic meltdown.
And by the way, Renee, the recommendation of the committee: The government shouldn't pay attention to these ratings agencies.
MONTAGNE: Well, though intended or not, what political effect do you think this downgrade will have on the president?
ROBERTS: Oh, it - I think it could be very devastating for him. Time magazine has George Washington with a black eye. The Republican presidential candidates get to say this is the first time in U.S. history that this has happened, and it's happened under this president. Unless he has a magic wand to turn the economy around, President Obama is in for a tough slug over the next year.
MONTAGNE: Thanks much. That's NPR's Cokie Roberts.
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