She repeated her opposition at a Republican debate in Ames, Iowa, on Aug. 11, 2011, when asked if she was concerned about the United States defaulting and not paying its debts.
"If you had your way, the debt ceiling would not have been raised," said Susan Ferrechio, a debate moderator. "What do you say to analysts who insist that Americans' investments, their 401(k)s, their college funds would have been far worse off today?"
"I think we just heard from Standard & Poor's," Bachmann said. "When they dropped our credit rating, what they said is, we don't have an ability to repay our debt. That's what the final word was from them. I was proved right in my position. We should not have raised the debt ceiling. And instead, we should have cut government spending, which was not done. And then we needed to get our spending priorities in order."
Is that what Standard & Poor's said? And did the report support her position that the debt ceiling should not have been raised? Her statement was a disputed point in the post-debate analysis, so we decided to check it out for ourselves. (We should also note that her claim that the deal did not cut government spending is questionable at best. The nonpartisan Congressional Budget Office said that the deal would cut "at least $2.1 trillion" between 2012 and 2021.)
A little background: Standard & Poor's is a New York-based ratings agency that studies the financial markets. It issues guidance to investors and rates various investments for financial risk. On Aug. 5, it downgraded its credit rating for the United States one notch, from the top-rated AAA to AA+. (The other two ratings agencies, Moody's and Fitch, did not lower the U.S. rating.)
The Obama administration strongly objected to the ratings downgrade and disputed Standard & Poor's analysis. Others criticized the company for its performance in previous years, when it gave high ratings to mortgage securities that subsequently proved worthless.
The downgrade didn't seem to have much effect on investors' desire to hold U.S. Treasury bonds and other securities, which are still widely perceived as safe investments.
Bachmann said that when Standard & Poor's dropped the rating, "what they said is, we don't have an ability to repay our debt" and she said it supported her position that the ceiling should not have been raised and that spending should have simply been cut. Bachmann also opposed any type of tax increases, including closing loopholes, which Democrats supported.
To fact-check Bachmann, we read Standard & Poor's original report on why it issued its downgrade.
To put it in simple terms, Standard & Poor's had two main reasons for the downgrade: First, that the size of the U.S. debt is very large and growing, and second, that politicians seem unable to agree on what steps to take to reduce it. It called the political process "contentious and fitful," and said the firm was "pessimistic" that the White House and Congress would be able to agree on measures to significantly reduce the debt anytime soon.
A Standard & Poor’s director said for the first time Thursday that one reason the United States lost its triple-A credit rating was that several lawmakers expressed skepticism about the serious consequences of a credit default — a position put forth by some Republicans.
Without specifically mentioning Republicans, S&P senior director Joydeep Mukherji said the stability and effectiveness of American political institutions were undermined by the fact that “people in the political arena were even talking about a potential default,” Mukherji said.
“That a country even has such voices, albeit a minority, is something notable,” he added. “This kind of rhetoric is not common amongst AAA sovereigns.”
Let’s try to wrap our heads around this. Bachmann’s opposition to raising the debt ceiling is one of the most important planks in her presidential platform. She has touted it in two ads, presenting it as a sign of her courage. She repeated it again last night at the debate, asserting that opposing the hike is “the right thing to do,” and even cited Standard and Poors’s downgrade as proof of her superior grasp of our fiscal dilemma.
Less than 24 hours later, the news emerges that S & P has confirmed that it was precisely this opposition to raising the debt ceiling, and the cavalier attitude towards default exhibited by the likes of Bachmann, that led to our downgrade.
The question of what led S & P to downgrade our credit rating is a matter of verifiable fact. And S & P has now confirmed that one of the central rationales of her candidacy is a key reason for their downgrade. What will she say when confronted with this fact? How will she explain it away? Will anyone even ask her to try to explain it?
In a rational universe, this would be devastating to her candidacy. Of course, the world of GOP primary politics is anything but a rational universe.
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