S&P targeted by top economic voices
August 7th, 2011
10:40 AM ET
11 years ago

S&P targeted by top economic voices

Washington (CNN) - Two top financial voices from different sides of the aisle voiced outrage on Sunday over Standard & Poor's downgrade of the United States’ credit rating, but disagreed on whom to put the blame.

Steve Forbes, CEO of Forbes, Inc. and a former Republican presidential candidate called S&P's downgrade from AAA to AA+ Friday, "an outrageous move" given that the government can still pay the interest and principal on its bonds.

"I'm surprised S&P would play politics," Forbes said on CNN's "State of the Union."

Larry Summers, former director of the National Economic Council under President Barack Obama, agreed that the U.S. will pay its debts.

"S&P's track record has been terrible and as we've seen this weekend its arithmetic is worse," Summers said on CNN's "State of the Union." "So there's nothing good to say about what they've done."

In a report Friday, S&P ruled that the plan agreed upon by Congress and the Obama administration to raise the debt ceiling fell short of the necessary measures to stabilize the government. They also cited dysfunctional policymaking as a factor in the downgrade, the first for the U.S.

But Summers placed the blame on House Republicans, who he said "played chicken with America's credit worthiness." He also defended the Obama administration, whose stimulus program at the beginning of the administration helped economic growth and who he said could not have foreseen the European financial crisis or high energy prices.

"God knows if we hadn't pursued these policies we would be looking at another version of what happened in the 1930s," Summers said.

Forbes defended Congressional Republicans, who he said were elected to "undo the fiscal damage" of the Obama administration.

"We're like an automobile going 25 miles per hour when at this stage we should be on an open highway going 75 miles per hour," Forbes said.

It is the slow growth, Forbes said, that is causing private capital to flee overseas.

"They don't see productive investment opportunities here at home and that has to be laid at the feet of the Obama administration," Forbes said. "They're the ones that put in this massive spending and the health care and all of these other regulations. Can't blame all that on George Bush."

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Filed under: Economy • Larry Summers • Steve Forbes • TV-State of the Union
soundoff (41 Responses)
  1. Mike in Texas

    If you ask conservatives you will get the following:

    President Bush didn't become President until 9/12/01.
    The U.S. had no debt until January 20, 2009.

    Just one question.....when congress decides to spend more than the previous Congress and decides to collect less revenue than the previous Congress what do you get? The Republican Congress from 2001-2007.

    Cut out loopholes, cut out most tax deductions, simplify the code, but no flat tax. Get rid of no bid contracts, lobbyists, and limit campaign contributions and reduce the campaign cycle time.

    Economists on both sides agree that the only way to control deficits is through spending cuts and revenue increases, whether it be eliminating tax deductions or raising rates. I say cut out deductions first and tell Grover Norquist stick it where the sun don't shine.

    I pledge allegiance to the Flag of the United States of America not Grover!!

    August 7, 2011 12:21 pm at 12:21 pm |
  2. MAC

    If we raise taxes to cut the deficit, are most of you dumb enough to believe the money will be spent to reduce the defcit. The more money DC gets the even more it wants to spend. Also rebuild the infrastructure is a good idea, but do the unions and companies ever get the work done on schedule? They are rebuilding 285 and I 225 here in Denver and at the rate they are going it will take longer to refurbish the roads and exits, than it did to build them in the first place. Also on taxes, I personally do not like giving 43% of my wages to the government with all the taxes the Fed, State, County, City hit us with.

    August 7, 2011 12:21 pm at 12:21 pm |
  3. roro

    This is all a problem caused by the former administration NOT funding 2 wars and a huge prescription bill, along with tax cuts for the wealthy. Then all this was further exacerbated by NOT ENOUGH stimulus money. The stimulus didn't go far enough and the new healthcare doesn't go far enough. That's why the economy is not growing fast enough. You can't cut spending and then expect the economy to grow. If I don't have enough money I won't be spending it, businesses cut back, people lose their jobs, and then they don't have enough money to spend, and on and on in a vicious cycle. The Republicans and their Tea Party thugs are the reason for this debacle. Sure, cuts have to be made, and waste has to be eliminated, but wholesale slashes are not the answer when the country is already in a recession. It's job, people. Where are the jobs the Republicans promised that got them into office last year? Forget your social agendas for now and work on JOBS.

    August 7, 2011 12:29 pm at 12:29 pm |
  4. Jason Lewis

    Haven't we learned yet that finger pointing doesn't solve anything? We are all accountable for what happens to this country, because it is a government of the people. At least it's supposed to be...

    August 7, 2011 12:34 pm at 12:34 pm |
  5. Ridiculous

    All people on here supporting either one side (dems. or repubs. or even tea party now) are close minded, fact less morons. Vote for a country, not for a party. Until the political classes are wiped away, we will never be a united country. Read your history folks, go back and re-read George Washington's proposal's for the future of the United States and you will see that the US did not become what its fore-fathers had intended.

    Politicians and people who support DEMS or REPUBS. or even tea party are mindless drones who cannot make decisions for themselves.

    August 7, 2011 12:34 pm at 12:34 pm |
  6. Nick B

    S&P is right. Our volatile and unpredictable (well, predictably bad) political system right now is the problem.

    August 7, 2011 12:35 pm at 12:35 pm |
  7. Bob

    "Dysfunctional policymaking" is not grounds to downgrade. The only reason to downgrade debt is if there is a credible reason to believe that principal and interest will not be paid on new or existing debt.

    The problem is that Obama scared the bond market raters by saying we would default. We were never in any danger of defaulting on our debt. We will however be in danger if we do not get our spending under control and Obama has vowed to increase spending by 8% a year (and that is without considering Obamacare).

    The Republicans are almost as bad. They would be pleased with increasing spending by 7% a year.

    8% a year! THAT is where the problem is. Our dysfunctional spending is going to destroy the country.

    The only people talking sense are Rand Paul and the TEA Party. We must cut spending. Military. Education. Social programs. Everything. Everything we do is grossly overfunded.

    August 7, 2011 12:35 pm at 12:35 pm |
  8. Kim V. Robinson

    Who own S&P? McGraw Hill. What are their political alliance? Is this about hurthing OBAMA in 2012 or about hurting the US or both? To me it is a economic and political act of war? America should respond as we always do!

    August 7, 2011 12:37 pm at 12:37 pm |

    There should be a thorough investigation into all that went into the US credit downgrade by S&P. If I were to have a $2 Trillion (sorry a $200) error in my accounting... I would likely be fired ... S&P should fire the analysts, Beers and Chambers .... thats a fact ....

    What was the level of diligence that went into the decision should be examined by the congress and the DOJ. If there were motivations (e.g., We want S&P to be the first to do it ... I will be in the limelight for a while) beyond credit worthiness ... they should be examined ....

    S&P is a corrupt useless organization .... close the shop

    August 7, 2011 12:39 pm at 12:39 pm |
  10. Ken in NC

    House Speaker John Boehner said he "got 98 percent of what I wanted". It is then by assumption that he also has 98% of the responsibility for 98% of the condition of our economy. Republicans and the Tea Party played "Chicken" with the Full Faith and Credit of the United states and with our National Debt and they lost. If I could have 3 wishes, my first wish would be that all Republicans awaken on the dark side of the moon. Second wish would be that they nor their ancestors never agai be able to find their way back to earth and my third wish would be to check to insure that none of them were over looked in my first wish like for instance some Republicans that are passing as Democrats when they are in fact DINO's.

    August 7, 2011 12:41 pm at 12:41 pm |
  11. Mark NJ

    Hey CK1 and Rick Mc daniel...You are as ignorant as most of the Tea Baggers and the ultra right wing Fascist Republicans. Remember Obama did not create this massive deficit but republicans who squandered the largest surplus in american history, repealed pay as you go, 2 ill fated lying murdering wars and a drug program that cowtowed to the pharmicutical industry (which non have been payed for). You and your counter parts are the morons and kool-aid drinkers that got us into this mess.

    August 7, 2011 12:42 pm at 12:42 pm |
  12. Hilarious

    S & P is a joke...everyone knows this.

    August 7, 2011 12:45 pm at 12:45 pm |
  13. David

    IIf Obama wins in 2012 the Tea Party will disappear like smallpox.

    August 7, 2011 12:47 pm at 12:47 pm |
  14. manny

    America should look up north and see how Canada got itself out of the same situation in the 90's...lots of cuts and reduce entitlements....as well, tighten up banking regulations...Canada did not have any banks fail during the crisis...Canada also allows for drilling in the oil sand in Alberta which brings in alot of revenue...they are now 2nd in the world for oil reserves...America has the same opportunity with the oil shale reserves they have.... But, once again the small majority call the shots...extreme enviromentalist nutjobs win again...

    August 7, 2011 12:47 pm at 12:47 pm |
  15. John

    S&P - Hold Your Ground. Thank You for Your Integrity and Standing Up to what must be incredible Political pressure and pressure from so many politcally connected businesses. The Debt and continuing Debt growth are unsustainable - and dont even consider the massive and exploding unfunded Pension and Retiree Healthcare benefits (Social Security and Medicare). The fact the US can "just print paper money to pay" is a foolish argument, that no objective economic assessment can support. We've got real, real problems.

    August 7, 2011 12:48 pm at 12:48 pm |
  16. Anonymous

    The Dems answer to every deficit is raise taxes. In my lifetime, the only group that has effectively argued we're spending too much is the tea party. Since 1958 we have run a surplus only 5 years. The trend is not sustainable. Revamp the tax code, broaden it so everyone is paying at least a little, eliminate outrageous deductions for mortgage interest, charitable deductions, etc and then raise the upper backet. Then cut spending like crazy until we get back to a balanced budget. You can't solve this problem by just raising the top rate. The problem's too big.

    August 7, 2011 12:49 pm at 12:49 pm |
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