Waldman: Kansas is a Tea Party lesson for the rest of US

Me and a Democrat buddy of mine (notice I omit the -ic at the end of Democrat to pander to my conservative friends) were complaining about Republican politicians when he said in frustration, "We should just elect all their Tea Party guys and let them run the country into the ground so people can see once and for all what happens."

I admit I'm tempted by that possibility sometimes; then I remember that we're talking about millions of people's lives and well being at stake, including innocent children who would probably lose their food stamps, school meals, libraries, health care, etc. if the Grand Old Tea Party got its way.

Instead we can look to Kansas, one of our 50 "laboratories of democracy," to see what happens when extreme right-wing ideologues take power.  Paul Waldman is Kansas' herald of doom [emphasis mine]:

In 2012 and 2013, [Governor] Brownback and Republicans in the legislature cut income taxes twice, eliminated taxes on corporate profits that are “passed through” to individuals (making it the only state that does this), and since they’re Republicans, made changes to the tax code that had the effect of raising taxes on the poor (the Center on Budget and Policy Priorities has agood explanation of the tax changes and their effects). The governor has said his goal is to eventually eliminate the income tax completely.

And what happened? At a time when most states are seeing higher revenues as the country recovers economically, Kansas’ revenues have plummeted. The result has been cuts to schools, cuts to higher education, cuts to libraries, and cuts to local health centers.  Kansas’ job growth and income growth are lagging the nation’s.  In response to the fiscal difficulties, Moody’s recently lowered the state’s bond rating.

Waldman should also have noted that Kansas was not that bad off to begin with in 2012 when the GOP took over. Relatively speaking, Kansas was in the middle. And in terms of economic security as an index of factors, Kansas was one of the most secure economically, post-recession.  

So, based on ideology not fiscal or economic necessity, Gov. Sam Brownback and his GOP super-majority, said basically, "If it ain't broke let's fix it."  

Thankfully, their toxic experiment was contained to relatively isolated and sparsely populated Kansas. The only good results are, as I said, a warning to the rest of us, and that the Kansas GOP is now in a state of "civil war" between Tea Party extremists and everybody else.

GOP governor implements GOP economics, disaster ensues

By Paul Waldman

July 16, 2014 | Washington Post

URL: http://wapo.st/1r4ijC6

Austerity punks downgrade Britain's debt anyway

Sorry, I missed this story when it happened but it's still worth dwelling on because you won't hear this in the U.S. media.  Fitch's downgrade followed Moody's downgrade of Britain's sovereign debt in February.

Let me underline why these downgrades by the independent ratings agencies are so important: this is the exact consequence that advocates of austerity warned Britain to avoid, and yet austerity has made their worst nightmare come true.

For all you Tea Partyers, let me make it simpler: cutting government spending led to a weaker economy and thus higher government debt, which led to ratings downgrades.

Let me also point out the outrageous, self-serving logic of Fitch:

"The current pace of deficit reduction doesn't seem excessive," Fitch analyst David Riley said. "Other countries in Europe are cutting at a similar speed or even faster."

Translation: "As good little neoliberals, we at Fitch agree ideologically with rapid deficit reduction, but we base our ratings on actual results, which have been awful, so... take that."

That's called damned if you do, damned if you don't, folks.  It's safer to ignore the austerity punks and strive for a growing economy, because the austerity punks are fair-weather friends of budget-cutting states.

Fitch strips UK of triple-A rating, austerity debate deepens

By Christina Fincher and David Milliken

April 19, 2013 | Reuters

URL: http://uk.mobile.reuters.com/article/idUKBRE93I0SJ20130419?irpc=932

Thanks, austerity: Moody's downgrades UK's debts

Let's be very clear: this was not supposed to happen, according to conservatives and financial markets gurus. Great Britain embraced austerity -- it is still embracing austerity -- and yet Moody's has cut its credit rating to AA1.  So here is yet more evidence for those who still need it that national governments are not households, and the same rules do not necessarily apply.

Why?  Slashing public spending put the UK in a recession that -- get ready, Tea Partyers, this is the part that always gets you -- increased public debt. Here it is again, in case you missed it: slashing spending hurt the economy which increased debt:

“The main driver underpinning Moody’s decision to downgrade the UK’s government bond rating to Aa1 is the increasing clarity that, despite considerable structural economic strengths,” the Moody’s report reads, “the UK’s economic growth will remain sluggish over the next few years due to the anticipated slow growth of the global economy and the drag on the UK economy from the ongoing domestic public- and private-sector deleveraging process.”

The "ongoing deleveraging process" is business-speak for cutting one's debts. And there was an extra "f*** you" from Moody's after it cut the UK's bond rating:

“A combination of political will and medium-term fundamental underlying economic strengths will, in time, allow the government to implement its fiscal consolidation plan and reverse the U.K.’s debt trajectory.”

In other words, Moody's said, "We think you're doing all the right things, and we hope that someday it will work out for you, but in the meantime it's not, so we're downgrading you."  

That's called "damned if you do, damned if you don't," folks. But if you want to know what the "confidence fairy" really believes, look at what she does (downgrading), not what she says (cheering on austerity).

One final note: the credit ratings agencies do not rate debt levels, they rate the ability to pay one's debts. They're not the same thing. In the U.S., we have a record-high national debt, ($7 trillion of it thanks to Dubya), and yet government spending to pay the interest on that debt is at a record low, thanks to record-low interest rates. 

Moody's Downgrades UK Rating From AAA To AA1

By Jill Lawless

February 22, 2013 | AP

URL: http://hosted.ap.org/dynamic/stories/E/EU_BRITAIN_ECONOMY?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT

How ratings agencies sold us out

Here's how this good but long article ends up:

The ratings agencies [Moody's, Fitch Ratings, and Standard & Poor's] and were under no legal obligation since technically their job is only to give an opinion, protected as free speech, in the form of ratings.

"As an analyst, I wouldn't have known there was a compliance function. There was an attitude of carelessness, of careless ignorance of the law. I think it is a result of the mentality that what we do is just an opinion, and so the law doesn't apply to us," [Eric] Kolchinsky [managing director of Moody's structured finance division in 2007] said.

Experts such as Columbia University's [John] Coffee think that Congress must impose some legal liability on credit rating agencies. Otherwise, they'll remain "just one more conflicted gatekeeper," and the process of pooling loans -- essential to the flow of credit -- will remain paralyzed and economic recovery restrained.

"If (credit) remains paralyzed, small banks cannot finance the housing demand. They have to take them (investment banks) these mortgages and move them to a global audience," said Coffee. "That can't happen unless the world trusts the gatekeeper."

How Moody's sold its ratings -- and sold out investors

By Kevin G. Hall

October 19, 2009 | McClatchy Newspapers

URL: http://www.mcclatchydc.com/politics/story/77244.html