Rick Fry, Senior Research Associate at the Pew Research Center, on new data that shows young adults are shedding debt faster than older generations.
[via US News]
Capital flight, soaring borrowing costs, tanking currency and stocks and a central bank forced to pump vast amounts of cash into local banks — that is what Japan may have to contend with if it fails to tackle its snowballing debt.
Chart of the Day: The amount that students owe quintupled between 2000 and 2011. For more, check out our MoJo College Guide.
So, who are the last countries remaining in the Triple-A Club?
- 1. Australia
- 2. Canada
- 3. Denmark
- 4. Germany
- 5. Holland
- 6. Norway
- 7. Singapore
- 8. Sweden
- 9. Switzerland
At risk of losing AAA Rating:
- 1. Austria
- 2. Finland
- 3. France
- 4. United Kingdom
“Keep in mind that Japan lost its AAA rating in the late 1990s. It was further downgraded earlier this year. It was as recently as 2009 that S&P cut Ireland’s AAA rating. Italy and Spain were both AAA rated in the 1990s, but Spain was actually raised back to AAA before losing it again in 2009.”
Rep. Emanuel Cleaver, a Missouri Democrat and chairman of the Congressional Black Caucus, protesting the tentative debt deal. In subsequent messages sent out on Twitter, Cleaver said that the deal was “antithetical to everything the great religions of the world teach” and that “Democrats got nothing in this deal.”
Only problem with this analogy: “sugar-coated satan sandwiches” are delicious.
The American people, the world’s financial markets and the pundit classes remain perplexed by the Republican Party’s dangerous brinkmanship. Why would they risk financial armageddon? What is the practical gain to be had from such irresponsible behavior? Is this a ploy to undermine the Democrats before the 2012 election?
Observers remain befuddled because they have failed to connect the dots between the Republican Party’s intransigent stubbornness and a populist brand of conservatism where the world of facts has been made secondary to the intoxication of faith.
Consider the following: faith is based upon a belief in that which cannot be proved or demonstrated by normal means. Faith is also immune and separate from tests of empirical proof. Not to be overlooked, the contemporary Republican Party is home to the Religious Right. Consequently, the primacy of “faith” as the decision rule in political decision-making is both a perfect and logical fit for conservative populism.
When coupled with conservatives’ penchant for authoritarianism, their adherence to simple moral scripts, and a either/or binary world view, the allures of faith mated with fiction are irresistible to the Republican Party. Thus, the idea that politics should serve the common good for all is truncated and superseded by the pursuit of a common good that is only for the faithful, the few and the ideologically pure.
In all, the Republican Party is possessed by a spirit of willful denial: aided and abetted by the right-wing media, Conservatives can bend the world to their wishes; reality is subject to their fantasies; any belief, however specious, is made true because they want it to be so. This is a pathology that extends both to the debt ceiling debate and the broader assault by conservatives on the country’s social safety net. Both are examples of a frightening pseudo religion called Free Market Fundamentalism—a faith based on a set of assumptions that are immune to interrogation, challenge or the collective weight of reality.
Myth Number One: The crisis over the debt ceiling is an artificial panic. There will be no serious consequences if the United States does not resolve this issue by August 2, 2011. In fact, President Obama and the Democrats are trying to scare the American people into thinking that a calamity will occur if the United States chooses to selectively pay its bills. Alternatively, the United States Treasury has more than enough revenue to push the debt ceiling issue down the road to a future date.
While Tea Party darlings such as Congressman Allen West are saying this is “much ado about nothing,”a failure to resolve the debt ceiling crisis would be an unprecedented event in American history. A range of non-partisan organizations, financial giants such as Standard & Poor’s, Moody’s and even the Chinese government are warning the Obama administration that if the United States were to default on its debts a global financial crisis would ensue. Moreover, a myriad of government agencies would be closed and a shock wave would ripple out to all corners of the U.S. economy.
Myth Number Two: Supply side, trickle-down economics are always the solution to America’s financial woes.
In reality, there is little to no proof that tax cuts have ever paid for themselves. In almost all cases, they are a drain on revenue. As demonstrated by the Bush and Obama years, the latter’s continuing of the former’s policies have resulted in a net loss to the federal budget. Tax cuts for the richest Americans have not been broadly stimulating. Moreover, they played a role in causing (and deepening) America’s current fiscal crisis.
Myth Number Three: Unions hurt the economy, take away jobs from American workers and impede economic growth. The way out of the Great Recession is to complete the destruction of the public sector workforce through a final demolition of unionized labor and the elimination of minimum wage laws.
The truth is a different matter. Historically, strong unions were responsible for the growth of the American middle-class. As seen across the advanced economies of the world, there is a direct correlation between unionized labor, a high standard of living and wages that allow for a healthy level of long-term consumer spending and economic growth. Minimum wage laws, as well as other income supports, positively stimulate the U.S. economy.
Myth Number Four: “Job creators” are being punished by Obama’s tax policies and any increase in taxes to resolve the debt crisis will further extend the Great Recession.
The corporations and financier class (who ostensibly create jobs) have long benefited from some of the lowest effective tax rates in the world. Both have grossly and disproportionately gained from a financial bailout that has increased their profits and earnings to record rates, all the while new hiring remains stagnant. Coupled with this troubling phenomenon, the last three decades have witnessed the rise of neo-liberal economic policies that have exported American jobs while generating record corporate profits. There seems to be little if any connection between the policies that have enabled the corporateocracy’s growth, and the overall financial health of the average American worker, who is struggling with record levels of unemployment, a mortgage crisis of historic proportions, crippling debt, and a diminished standard of living.
Myth Number Five: An increase in taxes on the wealthiest Americans is “class warfare” and proof of President Obama’s “socialist” policies.
The United States exhibits a severe and unequal level of wealth and income distribution: the top 1 percent of the population holds at least 20 percent of the wealth. Adding insult to injury, the very top 1 percent of Americans earns an average of $27 million a year per person, while the bottom 99 percent of Americans earns an average of $31,000 a year. The average salary of a corporate CEOis now at least 500 times more than the average worker.
In a progressive tax system those who earn the most income should pay higher taxes. However, in the United States the effective tax rate on the wealthiest Americans has decreased over the last 30 years, while middle-class Americans have seen relative tax burdens increase as a percentage of their respective incomes.
Yes, there is a class war in the United States. But it is being waged against the middle and working classes, where for the last 40 years the minimum wage has effectively decreased when controlled for inflation, and earnings have gone down when controlled for inflation—all in an era when highly favorable tax policies have encouraged unprecedented economic growth for the richest Americans. In a post-Citizens United era when corporations can donate unlimited monies to influence elections, these radical levels of economic inequality will only worsen.
The debt ceiling crisis has revealed the noxious hold that a politics of faith—one that is immune from reason and fact—has on the contemporary Republican Party. In practice, politics ought to be based on compromise. Because faith supersedes reason for conservatives in the Age of Obama, compromise is made difficult…if not impossible. As revealed by the debt ceiling crisis, the Tea Party GOP’s need for ideological purity is the fuel for a dangerous holy war where the target is the economy of the United States, and the American people are collateral damage.
America’s Debt 20 Years Back
CNN takes a look at the battles over the deficit and debt ceilings since 1985
Anyone who characterizes the deal between the President, Democratic, and Republican leaders as a victory for the American people over partisanship understands neither economics nor politics.
The deal does not raise taxes on America’s wealthy and most fortunate — who are now taking home a larger share of total income and wealth, and whose tax rates are already lower than they have been, in eighty years. Yet it puts the nation’s most important safety nets and public investments on the chopping block.
It also hobbles the capacity of the government to respond to the jobs and growth crisis. Added to the cuts already underway by state and local governments, the deal’s spending cuts increase the odds of a double-dip recession. And the deal strengthens the political hand of the radical right.
Yes, the deal is preferable to the unfolding economic catastrophe of a default on the debt of the U.S. government. The outrage and the shame is it has come to this choice.
More than a year ago, the President could have conditioned his agreement to extend the Bush tax cuts beyond 2010 on Republicans’ agreement not to link a vote on the debt ceiling to the budget deficit. But he did not.
Many months ago, when Republicans first demanded spending cuts and no tax increases as a condition for raising the debt ceiling, the President could have blown their cover. He could have shown the American people why this demand had nothing to do with deficit reduction but everything to do with the GOP’s ideological fixation on shrinking the size of the government — thereby imperiling Medicare, Social Security, education, infrastructure, and everything else Americans depend on. But he did not.
And through it all the President could have explained to Americans that the biggest economic challenge we face is restoring jobs and wages and economic growth, that spending cuts in the next few years will slow the economy even further, and therefore that the Republicans’ demands threaten us all. Again, he did not.
The radical right has now won a huge tactical and strategic victory. Democrats and the White House have proven they have little by way of tactics or strategy.
By putting Medicare and Social Security on the block, they have made it more difficult for Democrats in the upcoming 2012 election cycle to blame Republicans for doing so.
By embracing deficit reduction as their apparent goal – claiming only that they’d seek to do it differently than the GOP – Democrats and the White House now seemingly agree with the GOP that the budget deficit is the biggest obstacle to the nation’s future prosperity.
The budget deficit is not the biggest obstacle to our prosperity. Lack of jobs and growth is. And the largest threat to our democracy is the emergence of a radical right capable of getting most of the ransom it demands.
Default Would Kill Jobs
More Consequences Of Hitting The Debt Ceiling: Sudden Reduction In Government Spending, Slower Growth, Higher Unemployment
via The New Republic
Let the West Wing explain the debt ceiling to you and let Kristen Chenoweth be your tiny, adorable stand-in.