Stop the presses, folks! You know we’re in campaign season when the White House plays defense and plans a road show any time some person, company or Tea Party member says something publicly about the short-term outlook for - as so fittingly described by Gordon Gekko - the dysfunctional corporation known as the U.S.A.
That’s exactly what happened when a certain ratings company located on the southern tip of Manhattan decided to issue a statement about the scary and uncontrollable deficit and questioned whether the crew in Washington had enough juice to tackle it.
Standard & Poor’s didn’t downgrade the country’s triple-A status, but it did place the country on alert and plan on watching the shenanigans closely to see if our lawmakers and president can somehow come up with a plan pay off $14 trillion in debt without having to sell Maine, Vermont and parts of New York to the Canadians.
But how about the reaction from the Obama administration? Rather than issue a credible plan, it attacked like a bully and made comments about “political motivation” on the part of S&P. Really? Every time I visit the good people at 55 Water St., all they say is how Wall Street is improving in terms of spirit, morale and - most important - employment. That’s not what people say when they are out to embarrass the Obama administration.
Why would they issue a negative statement with obvious political connotations and risk harm to the one sector that is obviously improving? It’s crystal-clear to those in the know that S&P is deeply concerned about the lack of urgent efforts to lower this critically high fiscal risk. So they did what any responsible group would do, realizing the influence such comments would have: They told the White House first.
The White House didn’t respond equally responsibly. Instead, the striking attacks following S&P’s release were more inflammatory than helpful in calming the markets. The Obama administration had more than 48 hours to craft a response, plan media appearances and provide a positive tone rather than the knee-jerk responses from Treasury Secretary Timothy F. Geithner, Chairman of the Council of Economic Advisers Austan Goolsbee and, my favorite - anonymous senior White House officials.
Had it not been for the Fed’s timely injection of $6 billion, the markets most likely would have extended Monday’s sharp sell-off. Therefore, the White House can do what it does best and just ignore the S&P statement. If anybody like Sean Hannity, Rush Limbaugh or Neil Cavuto brings it up, White House officials can point to the market rally here and abroad and say, “See, S&P is irrelevant and wrong.”
The problem for the Obama administration, however, is that you can’t sweep a $14 trillion headache under the rug. The longer the president, his staff and Capitol Hill politicians wait to come up with a sensible spending plan that benefits the country, the more troubling it’s going to be for those seeking a return in 2012’s markets.
Americans are angry, tired of being pushed around, and want the change we were promised in November 2008. Want to know why Donald Trump is leading the polls by nine points? Because voters know he and the people in his circle are more likely to remove the deficit anchor from our ankles than the guy currently residing at 1600 Pennsylvania Ave. Plus, in a perfect Reaganesque way, he doesn’t seem too fond of Washington.
If politicians want a growing country, they need to face the music, listen to S&P and get the job done.
Todd M. Schoenberger is managing director of LandColt Trading.
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