it's like back during 2009, when the stock market would fall every time the President explained a Brilliant New Idea.
Why did Standard & Poor's drop its "negative" long-term outlook bomb on America's AAA credit rating yesterday? S&P revealed no numbers not previously known to a "shocked" stock market, which dropped 140 points. So what's new?
Chief White House economist Austan Goolsbee declared that S&P had made a "political judgment," and we'd have to agree, though probably not for the same reasons...There is only one reason the rating agency could suddenly have turned this dark on politics in Washington: President Obama's speech at George Washington University last Wednesday. Mr. Obama's "fiscal policy" speech may have sent progressive pundits cart-wheeling, but its political effect was to poison the prospect for budget negotiations.
The harshness of Mr. Obama's anti-Republican rhetoric and the universal conclusion that this was a Presidential campaign speech make it very difficult for GOP Congressional leaders to believe they can enter into a budget negotiation in which the White House will deal in good faith.
The hyper-politicized Obama White House calculated that the release of a GOP proposal by House Budget Chairman Paul Ryan was the moment to unveil its re-election counter-attack. This week Mr. Obama is taking that speech on what looks like the campaign trail, first at a Virginia community college and then in front of the millionaires and billionaires at Facebook's headquarters in Silicon Valley...
The Ryan budget has been criticized as heartless and cruel. But its purpose is to address the rising U.S. debt problem without tanking the U.S. economy, and to do so before a truly heartless and cruel credit downgrade of the sort S&P gave Japan in January. Mr. Obama's response was simply to mock the GOP proposal.
The ratings agencies are hardly the last word on U.S. economic health. But the S&P outlook is a warning to the White House that financial markets have noticed that this President seems to have decided that his path to re-election lies in demonizing his opponents rather than seeing to the nation's fiscal well-being.