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Dollar for Dollar



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I agree with Andy. It’s not a dollar-for-dollar match if Obama gets an extra trillion bucks in his pocket now in return for 900-and-whatever billion stretched out over ten years. That formula’s a crock.

Furthermore, at some point the crock risks straining the ratings system beyond repair. Just as Obama and Boehner want credit for talking about cuts without having to cut anything, S&P and Moody’s want credit for musing on downgrading without actually having to do it. That’s understandable: downgrading the United States has consequences that downgrading Ireland and Portugal doesn’t. But, having flopped out in 2008, they want something on the record this time round.

I don’t think that will be enough. The European Union, you’ll recall, was fulminating against the ratings gang a couple of weeks back, and threatening to criminalize them. I regard the EU as a pestilence and have no use for the Euro, but their complaint is not without merit — as I noted in my weekend column. Nobody in Greece, Portugal, Spain, or Ireland is talking about “out years” and exciting plans for spending cuts in 2020. They’re getting on with it now — and they’re still being downgraded.

By contrast, both U.S. political parties are playing croquet on the lawn in August 1914 — and the ratings agencies are stringing along with them. Whatever the comparisons of debt-to-GDP ratios between Greece, Ireland, and the U.S., the actual hard dollar amount involved here is of an entirely different order. The Boehner plan tells us that real fiscal discipline is impossible within the U.S. political system. At some point, the ratings guys have to call them on it — or render their system meaningless.  



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