Saturday, July 30, 2011

Demint and South Carolina Republicans put their State at severe financial risk with their extreme debt-ceiling stance

If the credit agencies downgrade U.S. debt, South Carolinians and all Americans will see their interest rates increase and more will be forced to do business with the many legal loan shark operations like this one on the outskirts of Spartanburg, that line South Carolina's roadsides.

Senator Jim Demint, the self-proclaimed Tea Party senator has stood fast to oppose raising the U.S. debt ceiling unless Congress passes a balanced budget amendment to the 50 State legislatures in just two days. He has been joined by the five Congressional Republicans that represent his State in support of the so-called Cut, Cap and Balance legislation and additional stonewalling strategies that have caused credit rating agencies such as Moody's to threaten downgrading  the country's current AAA credit rating.

Debt ceiling debacle poses greater fiscal risk to South Carolina than for other states
What is often not reported however, is that it the debt ceiling crisis also threatens the financial health of individual states that for one reason or another are highly dependent on Federal spending.

Because South Carolina is an "above average" recipient of funds for Medicaid and Federal procurement contracts, Moody's has threatened to downgrade their credit rating along with that of the Federal government if the risk to US solvency is determined to increase.

Logical Consequences, Illogical South Carolina Politicans
In one of the poorest states in the country (which explains its need for high levels of Medicaid funding), with some of the most egregious social problems that include the nation's highest violent crime rate, enormous public health problems and poor education a credit downgrade will result in immediate increased borrowing costs. Given the budget slashing passions of Govenor Nikki Haley and the conservative regime that runs her State, this will likely mean more budget cuts and more misery for South Carolina residents.

In this WSPA Channel 7 report a state official explains that South Carolina's high poverty rate makes it vulnerable for a credit downgrade if US credit is downgraded as well.

Its impossible to see how Cut, Cap and Balance is a anything but an effort to crash South Carolina's already fragile economy. It is nearly impossible to understand how the elected representatives of South Carolina can take such extreme positions in light of their State's financial vulnerability.

Who benefits from an economic strategy that is destined to cause so much pain to so many people?
Koch Brothers: generous Demint funders even when he faces no real campaign opposition
Big Boeing money goes to Senator Demint and South Carolina congressional Republicans
Demint evades blame in U.S. debt downgrade

Additional reading
Read Moody's report on South Carolina's possible credit down grade.
Read Washington Post report on South Carolina Republican congressional delegation's refusal to compromise
Read Associated Press report on how Jim Demint pulls the strings behind the right's inflexible approach to the debt ceiling debate.
Investors journal: South Carolina 6th worst run American state
South Carolina legislators pad income with excessive pension and salary scheme

1 comment:

  1. Talk about shooting yourself in the foot!