Plenty of bad news to chew over in the Morning Jolt…

[Standard and Poor's offered] a thoroughly depressing, and no doubt brutally honest, assessment.

Naturally, the Obama administration did what it does best in response: They blamed their political opponents.

This was a “tea party downgrade,” said [Obama chief strategist David] Axelrod on CBS News’ Face the Nation.

Axelrod said S&P’s decision was “largely a political analysis.” “And that’s what we should focus on because what they were saying is they want to see the political system work. They want to see a sense of compromise. They want to see the kind of solution that the president has been fighting for, a large solution that will deal with the problem, that will be balanced, that will include revenues.”

Instead, said Axelrod, conservative, Tea Party-influenced Republicans “played brinksmanship with the full faith and credit of the United States. And this was the result of that.”

“It was the wrong thing to do to push the country to that point” he said. “And it’s something that should never have happened. And that clearly is on the backs of those who were willing to see the country default, those very strident voices in the tea party.”

Of course. Nothing’s ever their fault.

 In fact, in the full statement, you’ll see, “Standard & Poor’s takes no position on the mix of spending and revenue measures that Congress and the Administration might conclude is appropriate for putting the U.S.’s finances on a sustainable footing.” It is revealing that Axelrod can look at this and declare, “they really agree with us!”

I like Ed Morrissey’s analysis: “S&P didn’t say anything yesterday that was not common knowledge and common sense.  If you had to rate a potential investment that had an income of, say, $22,000 a year but had costs of $37,000 per year, a standing debt of $143,000, and contracted future debt that exceeded $1 million, would you give that investment a gold-plated AAA rating and buy their bonds at the lowest interest rate possible, or at all?  Of course not, but that’s exactly the fiscal situation of the US, at a 100,000,000:1 scale. The anger is mainly misdirected.  The media wants to blame the Tea Party, but the Tea Party wants to solve the actual problem — overspending and over-commitment to entitlement programs.  The Tea Party wants to blame the Obama administration, and it deserves some blame for refusing to address the real structural problems of the US fiscal condition.  But that fiscal structure far predates Barack Obama, both as President and as human being, and Congresses and White Houses of both parties have done little to address the real problems in Medicare, Medicaid, and Social Security. Why?  Because as soon as people try to do so, demagogues accuse them of wanting to push Grandma over a cliff.  Voters respond by punishing the reformers and rewarding the demagogues.”

Nonetheless, the reckoning is at hand, and we can see who sees this depressing fiscal development as another crisis to not be wasted, another opportunity to demonize the opposition. It’s what they’ve been doing since Day One.

I’m reminded of Daniel Hannan’s remarks to former U.K. Prime Minister Gordon Brown, and can’ resist paraphrasing: “Soon the voters too will get their chance to say so. They can see what the markets have already seen: that you are the downgraded president of a downgraded country.”

TurboTax Timmy: The Administration’s Indispensible Man

By the way, back on April 19 of this year: “U.S. Treasury Secretary Timothy Geithner today said there was “no risk” that the United States would lose its prized AAA credit rating, saying political prospects for long-term deficit reduction were improving. “No risk of that,” Geithner told Fox Business Network when asked if the United States would see a downgrade after Standard and Poor’s on Monday slapped a negative outlook on its Treasury debt rating.”

Hey, Nostradamus is sticking around at Treasury: “Treasury Secretary Timothy F. Geithner has told President Obama he plans to remain in his job through the fall of 2012, keeping in place Obama’s longest-serving economic adviser after the first-ever U.S. credit downgrade and renewed fears of a second recession. White House press secretary Jay Carney said: ‘The president asked Secretary Geithner to stay on at Treasury and welcomes his decision.’”

“There’s still more downgrading to be done, apparently,” quips the JammieWearingFool.

Remember this comment from this morning, and cite it, and repeat it, the next time you hear some Democrat argue that the debt ceiling deal somehow hurt the economy:

GEORGE STEPHANOPOULOS: So this won’t cost us jobs?

TIM GEITHNER: No, it will not.

From the beginning, I expected that one of Obama’s goals in the debt ceiling negotiations was to get the Republicans to take as much ownership of the economy as possible – or at least begin to set up that narrative – so that he has a scapegoat for economic woes until November 2012. “I wanted to spend more on job creation, but Republicans would rather leave tax rates low on corporate jets. I wanted to do more to help struggling families, but they felt it was more important to help out hedge fund managers.”

Of course, there’s a glaring flaw in that argument: The debt ceiling deal was so harmful and destructive to the recovery that Americans have no choice but to reelect the president who signed it into law.

Either way, Treasury Secretary Tim Geithner just got the Republicans off the hook for job losses in the coming months. If Obama, or David Axelrod, or Debbie Wasserman Schultz, or some other Democrat attempts to blame the high unemployment rate on the debt ceiling deal, they’re contradicting the administration’s chief mind on economic matters.

The always-animated Prof. Peter Morici, of the Robert H. Smith School of Business at the University of Maryland, was on SiriusXM’s POTUS this morning, even more fired-up than usual.

He noted that life without a debt-ceiling deal after August 2 would be comparable to a government shutdown, inconvenient for some but not unprecedented and by no means the economic Armageddon some in the administration have suggested. And he insisted that the U.S. default is entirely avoidable even if no deal is reached in the next week.

“There is absolutely no possibility that we have to default on our debt,” Morici said. “We will only default if Secretary Geithner chooses to default to give the president political advantage.”

A fuller version of Morici’s argument can be found in his column from this morning:

Be clear, the U.S. doesn’t have to default on its bonds. After Aug. 2, it still will collect taxes and other revenue exceeding $180 billion per month; and interest payments on the national debt eat up less than $30 billion. If the Treasury prioritizes expenditures — as the state of Minnesota did during its recent shutdown — it could pay interest on bonds, roll over bonds coming due, and pay Social Security recipients and many other obligations, but it would be late to many vendors until the debt ceiling was raised or new sources of cash were found. The U.S. would not be insolvent but rather in a political crisis.

This morning on the radio, Morici elaborated, “The markets are starting to recognize this. I went to CNBC this morning with a stellar cast — you’ve never seen the green room so crowded at 4 in the morning. Because everyone thought the Asian markets were starting to panic. Guess what? They didn’t.”

He noted that the state of Minnesota just endured a government shutdown that represented a short-term irritation, but by no means an economic crisis: “There were still state troopers on I-35 and the prisons had guards and the welfare checks went out. Now, granted, they had the money and their shortfall was much less, more like 10 percent than 45 percent. But the reality is, this looks a lot like a government shutdown. Different things may get shut down. For example, in a normal government shutdown, the White House chef continues to work,” Morici said. “Well, maybe if Mr. Obama wants the Social Security checks to go out, he and Michelle can scramble eggs for the girls.”

As noted in the post below, the past few months have actually seen a very, very, very slight improvement in the national debt. So how did that happen?

According to U.S. Treasury figures at Debt to the Penny, the Total Public Debt Outstanding has actually shrunk from $14,345,537,505,802.45 on May 16 to $14,342,898,467,069.07 on July 19.

That’s $2,639,038,733.38 smaller, or a reduction of $2.63 billion.

During that time, the debt held by the public — regular old borrowing from anybody willing to lend to Uncle Sam, foreign or domestic — actually increased, from $9,717,694,227,528.65 to $9,753,904,328,297.12.

That’s an increase of $36,210,100,768.47, or $36.2 billion.

So how did the total debt shrink? Because the numbers improved in the category of intergovernmental holdings — money the government owes to itself, i.e., the Social Security Trust Fund. (You know that when you pay into Social Security, the money doesn’t actually go into any “trust fund” or Al Gore’s “lockbox.” The government takes that money and spends it, and writes itself an IOU to be paid back later. This is how one government account can owe another government account money.)

The national debt in the category of “intragovernmental holdings” shrank from $4,627,843,278,273.80 on May 16 to $4,588,994,138,771.95.

That’s a reduction of $38,849,139,501.85, or $38.8 billion.

The $38.8 billion improvement in one category of debt is greater than the $36.2 billion worsening in the other, thus the $2.63 billion knocked off the $14.3 trillion debt.

So what changed in May?

The federal government will start using “extraordinary measures” this week to juggle its finances to avoid hitting the nation’s debt limit this month, Treasury Secretary Timothy F. Geithner told congressional leaders.

Starting Friday, the Treasury will stop issuing State and Local Government Series securities, which count against the debt limit. The securities are used by governments to manage their expenses on tax-exempt bonds, and the move will deprive them of “an important tool,” Geithner said.

Geithner said that on May 16, he would suspend issuing new federal debt for the Civil Service Retirement and Disability Fund, which would allow Treasury securities held by the fund to be redeemed. The government also would suspend the daily reinvestment of securities held by the investment fund for the Federal Employees Retirement System’s Thrift Savings Plan.

Geithner may not like those “extraordinary measures,” but they’re actually getting the numbers moving in the right direction. It’s like watching an obese man skip his first dessert and do his first bit of exercise and see the slightest of improvements in his weight.

And you thought all of this posturing and all the hardline stances were bad for America’s financial future!

The Debt Ceiling Debate: Already helping America’s bottom line!

From the RNC this morning:

 IT’S NOT JUST RANGEL

Senator John Kerry Is Avoiding Paying $500,000 In Taxes On His Yacht.

Obama’s First Nominee For HHS Secretary, Tom Daschle, Failed To Pay $128,000 In Taxes.

Treasury Secretary Tim Geithner Failed To Pay $34,000 In Taxes.

HHS Secretary Sebelius And Her Husband Had To Pay $7,000 In Back Taxes.

Labor Secretary Hilda Solis’ Husband Had A Tax Lien On His Business For 16 Years.

Nancy Killefer, Slated To Be The White House Chief Performance Officer, Had A $900 Lien On Her House For Failing To Pay Unemployment Taxes For Household Help.

Lael Brainard, Obama’s Nominee For Undersecretary Of The Treasury For International Affairs, Was Late In Paying Property Taxes.