S & P condemns political deadlock

April 23, 2011

Because of the threat of partisan political deadlock, Credit rating firm Standard and Poor’s (S & P) downgraded its “outlook on the long-term rating of the U.S. sovereign to negative from stable”.  Press reports showed consistent right-wing bias, demonstrating again that the idea of the liberal media is a myth.

The Republican Party is promulgating the idea that there is a deficit crisis that demands immediate action, a deficit of mass destruction. While the S & P rating concerned the long-term, and focused on political issues, press reports on the S &P rating change tended to reinforce the crisis atmosphere and hence support the Republicans.  Here are some representative headlines and summary quotes.

From WESTINGHOUSE CBS :

“S&P lowers U.S. debt rating to ‘negative’”

Apr 18, 2011 … Growing budget deficit puts U.S. on easy footing as credit rating agency drops long-term outlook.

From GENERAL ELECTRIC NBC’s Today Show:

“The situation in this country with entitlements is a big issue”

From DISNEY ABC:

“S&P Cuts Long-Term Outlook for US Debt to Negative” 

From NEWS CORPORATION LTD (a foreign company) Fox:

“’Negative’ Outlook for U.S. Debt Sends Jolt Through Capitol Hill Debate on Debt Ceiling”

All of these headlines are misleading because they imply that the problem is urgent and economic, and concerns rating of U.S. debt.  In fact, S & P’s report actually said that the crisis was long-term, political in nature, and concerns its rating of the country (the “U.S. sovereign”), not specific debt instruments. 

The key points in the S & P report are as follows.

  • In the short term, the report says that the U.S has a “high-income, highly diversified, and flexible economy” that is “backed by a strong track record of prudent and credible monetary policy…”
  • After the worst recession, bailouts and stimulus measures created a budget problem. “In 2003-2008, the U.S.’s general (total) government deficit fluctuated between 2% and 5% of GDP. Already noticeably larger than that of most ‘AAA’ rated sovereigns, it ballooned to more than 11% in 2009 and has yet to recover.”
  • In the long term, S & P warns there is a risk that political factionalism may hinder the country’s ability to address the budget problem in a timely manner. 
  • “The outlook reflects our view of the increased risk that the political negotiations over when and how to address both the medium- and long-term fiscal challenges will persist until at least after national elections in 2012.
  • “Standard & Poor’s takes no position on the mix of spending and revenue measures the Congress and the Administration might conclude are appropriate. But for any plan to be credible, we believe that it would need to secure support from a cross-section of leaders in both political parties”.

In short the problem is not financial but political and it stems from Republican intransigence.

Based on the actual text of the report, the above headlines should have said something like “S & P condemns political deadlock.”  Instead, the headlines supported the Republican Party line about a debt crisis.  We should not be surprised that the media conglomerates show the same bias in their reporting that they show in their campaign contributions.  However conservative talk show hosts tell us the press has a liberal bias.  This is, of course, transparently silly. Media giants are not somehow the only corporations that are unable to make their employees do as they are told.  Furthermore, most employees do not need to be told what to do.  Media corporations hire editors who share their own conservative bias and who are anxious to please.

The current state of the media illustrates the wisdom of two tenants of the Machiavellian perspective. 

First, we view politics, not in terms of ideological conflicts or policy differences, but in terms of organizations and interests, conflicts and collaborations.  In this case, there are two clusters of organizations.  On the one hand there are organizations (such as international corporations and trade groups) that cluster around the Republican Party and that represent the interests of the oligarchy.  On the other hand, there are organizations (such as professional societies and associations) that cluster around the Democratic Party and that represent the interests of the productive professional class.  

The Republicans and Democrats have a deep conflict of interests about who will control the U.S. government and in whose interests (or against whose interests) that government will exert its coercive power.

Second, we believe that ideology and policy follows interests.  All of the above organizations have not only lobbyists but public relations firms whose job it is to manage the 24 hour news cycle. To understand what is happening, you must view a “news” story not primarily as information, but as a tactic.  

The Republican tactic is to create an artificial crisis (like the weapons of mass destruction tactic that launched the war in Iraq) and to use the crisis atmosphere to justify radical changes in the American political system.  The goal is to make the government serve the interests of the oligarchy and keep the government from “wasting” money on programs (such as medical care, consumer protections, and environmental regulation) that promote the interests of the professional class.  For this reason the Republican budget proposals favor high military expenditure, which is good for big business, but otherwise oppose government spending.  It advocates additional tax cuts, not just to line the pockets of the oligarchy, but to starve government agencies that regulate and therefore curtail corporate political power.

From the Machiavellian perspective, the likelihood of a budget deal is vanishingly small, because it is not in the interests of the Republican Party.  Delaying a budget deal will undermine confidence in the U.S. political system and that will create real problems in the country’s ability to refinance its debt. It will transform the political problem into a real economic problem. That would be bad news for the country, but good news for the Republican Party.  The Republicans can be sure that, owing to the conservative media bias, a real economic crisis will undermine the Obama administration.  Furthermore, a real refinancing problem will add to the deficit of mass destruction hysteria and make it easier to sell a radical solution.   

The Republicans may be correct that lower taxes, less government regulation, less social welfare for the middle class, but high defense spending is the optimal government policy.  They may even be correct that the country should be run by and for the few individuals that control giant corporations (the oligarchy).  However, that is not the decision that is being presented to the citizens.  In fact, given the ownership of the media and the degree of media manipulation, the whole premise of an informed electorate has been seriously compromised and for that the right wing press has much to answer.

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