By Jan Erickson, Director of Programs, NOW Foundation
The possibility that Standard and Poor’s (S&P) could downgrade its AAA rating of the U.S. government’s credit-worthiness was supposed to send shudders through Congress and the investment community. The fairly obvious message to Congress was to press forward with draconian plans to cut hundreds of billions out of the budget, and eviscerate Social Security, Medicare and Medicaid, as well as make deep cuts in hundreds of social programs that protect middle and low-income families.
The Republican super-austerity budget for FY 2012 guarantees that millions more will be out of work, and most of those will likely be women. We can’t forget that women workers have already been seriously hurt by job loss in the recession.
But who would give any credibility to S&P, when that company gave prime investment grade ratings to hundreds of billions of dollars of securities that were backed by subprime and risky alternative mortgages — many of which were fraudulent? S&P, according to Dean Baker at the Center for Economic and Policy Research, “also gave Lehman, Bear Stearns and Enron top ratings right up until their collapse.”
S&P is a profit-driven corporation that is paid tens of millions of dollars to give good credit ratings to those same companies who may not deserve it. In an effort to stop this corrupt practice, Sen. Al Franken (D-Minn.) recently offered an amendment that would have taken away power of the issuer to select the agency that rates its bonds, shifting it instead to the Securities and Exchange Commission. Unfortunately, S&P and other bond-rating agencies lobbied heavily, and successfully, to kill the amendment. Such is the power of the financial sector in the U.S.
Congress will come back soon from its spring recess and will have to vote on raising the debt ceiling — an action that is about as red hot an issue as one can imagine. Deficit hawks are already screaming and ready to swoop down on those Democrats who vote in favor of increasing the debt ceiling. But in light of our desperate need to strengthen the economy and to generate jobs, a vote to increase the debt ceiling is an absolute must. And, Democrats must find the will to stand up for everyone in this country who is not super-rich and fight back against the Republican’s unfair and dangerous slashing of government spending and their guarding of tax cuts for billionaires.
If Congress and the White House are going to exert a forceful effort to guide the economy back to health, a multi-billion dollar federal stimulus to begin to restore eight million jobs lost in the recession is essential. Near-full employment is the ONLY answer to tough times — not austerity budgets, not putting the lid on federal spending thus keeping the recovery stalled and punishing women, the middle class and low-income earners. The country has suffered enough at the hands of wealthy corporate interests and their conservative minions in Congress who do their bidding.