Do you think the federal government has a spending problem? In private negotiations, President Obama reportedly told Boehner, "We don't have a spending problem." When Boehner countered that "we have a very serious spending problem," Obama eventually replied to Boehner, "I'm getting tired of hearing you say that."
Two days after the State of the Union, Democrat Iowa Senator Tom Harkin stated, "I want to disagree with those who say we have a spending problem." House Minority Leader Nancy Pelosi recently took up the refrain, telling Chris Wallace on Fox News, "It is almost a false argument to say that we have a spending problem."
It's also increasingly clear that those who disagree seem to pay a price for their truth telling. Egan-Jones, one of the only credit ratings firms not paid by the institutions they rate but by those investors who use the rating, has downgraded the U.S. credit rating three times in 18 months.On July 16, 2011, Egan-Jones downgraded the U.S.'s sovereign debt by one notch, to double-A plus from triple-A due to "the relatively high level of debt and the difficulty in significantly cutting spending." Two days later, the SEC's Office of Compliance Inspections and Examinations called Egan-Jones demanding information about its downgrade. That October, the SEC called Egan-Jones to inform the firm it was filing a Wells Notice indicating an SEC probe might be launched. Undaunted, in early April of 2012, Egan-Jones again downgraded U.S. sovereign debt one notch. Later that same month, the SEC brought administrative action and filed a complaint.
Egan-Jones initially questioned the SEC's complaint noting that the SEC had never raised any issues or concerns prior to the first downgrade. Since then, the case has been settled. Egan-Jones affirms that the registration reporting issues indicated by the SEC were addressed, but it neither admitted nor denied the accusations.
One outcome of the SEC's penalty raises questions. Egan-Jones, the only ratings agency not on Wall Street's take, is banned from for the next 18 months from rating U.S. government debt. In short, the Democrats won't have to hear Egan-Jones tell them they have a "spending problem" for 18 months.
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