July 30, 2011

Manchin: Credit Downgrade Would Be Terrible | Times West Virginian

FAIRMONT — Tuesday is the big day for which the default deadline bell tolls. 

Though Congress is closer to a deal, there is no agreement that crosses the divide between Democrats and Republicans. 

Sen. Joe Manchin, D-W.Va., held a press conference Friday to apologize for Washington politics and to share his optimism that there will be a deal cut by the Aug. 2 deadline. He supports a reasonable balanced budget amendment, but not as a condition for a debt deal. 

The Senator wants long-term debt fix so the nation can prevent a credit rating downgrade and put its fiscal house back in order. The credit rating agencies have signaled that unless there are $4 trillion in cuts, they will downgrade the U.S. credit rating. 

Manchin called the recent deal proposed by House and Senate leaders a short term fix that threatens vital programs and does little to solve the nation’s debt. He said neither plan currently being discussed to raise the debt ceiling — one offered by House Speaker John Boehner (R-Ohio), the other offered by Senate Majority Leader Harry Reid (D-Nev.) — would solve the nation’s long-term fiscal problems.

“I am not going to vote to raise the debt ceiling unless I see a pathway for a long-term fix,” he said to reporters Friday. 

Boehner’s proposal doesn’t include enough cuts nor is it sensible to have this debate again in 6 months during election season. 

“If you think this is horrible, you haven’t seen nothing yet if this is done during an election year where we are fighting the same battle,” Manchin said. 

Reid’s plan delays action until after the 2012 election. 

“That’s not fair either because then all you are doing is worrying about the next election and you have still not fixed the problem,” Manchin said.

Manchin said if he could give President Obama any advice at all, it would be “to talk to everyone on the front row, the back row, and everyone in between because this is one time you can’t just deal with a select group of people. We’re all in this — 535 members of Congress — it’s going to take all of us to work together for this great country. Everyone has a different style, but that would be my recommendation if I had anything to recommend to him.”

Manchin reflected on his time as governor when he dealt with the state’s credit crisis. The state’s credit rating was downgraded, so Manchin took steps to improve this rating. Fiscal prudence resulted in surpluses for the past 6 years. He said it is far more difficult to improve a credit rating after it has been downgraded.

“I know how hard it is to get a credit rating upgrade when you’ve been downgraded,” he said. “I don’t want to go through that because that can have an absolutely horrible effect on this economy.”

During Manchin’s speech on the Senate floor on Thursday, he talked about how the state was able to beat a similar crisis. “We did this in West Virginia by cutting spending, but not cutting vital programs or services,” he said. “We did this not by raising tax rates, but by ensuring everyone paid their fair share in our state. We did this tackling waste, fraud, and abuse so as to ensure we took care of those most in need, not those bent on greed. And by doing this, we helped to restore confidence to the economy of our state — that is a factor that we can’t overestimate.”

Manchin also apologized for the federal government’s inability to reach a bipartisan, long-term debt deal that will prevent this nation from defaulting.

“Before I say anything, I would like to start off with a profound apology,” Manchin said from the well of the Senate. “I want to apologize to every West Virginian and all Americans for the terrible process they have been made to endure and witness.

“With five days before an August 2nd deadline to raise the debt ceiling, this government faces yet another crisis of its own making, and yet it is not we who pay the price for our failures to govern — it is the American people.”

An echo from the movie “Mr. Smith Goes to Washington,” Manchin spoke truth to power during his Senate speech.

“While I will never question someone’s motivations or their heart, we all have a right to question the strategies of our leaders and colleagues — whether they’re Democrats or Republicans — because these strategies have once again led us to a crisis and the brink of a disaster,” he said.

Manchin pledged to vote against raising the debt ceiling unless Congress came to an agreement to curb long-term spending. During Manchin’s Senate speech, he vowed not to undone by politics.

“Washington may be broken, but it will not break me,” he said. “And you should not let it break you. I understand Speaker Boehner and Majority Leader Reid’s desire to prevent our nation’s default, but what we have before us are effectively a short-term fix and a shorter-term fix. Either one might prevent a default, which is a good thing, but neither may prevent a credit downgrade — which is a terrible thing.”

Manchin said the consequences of a downgrade are grim.

“To be clear, a downgrade in our credit worthiness could lead to a sell-off of stocks, Treasury securities, and U.S dollars,” he said. “Gold prices could rise even higher, and interest rates could increase across the board — which would not only have a devastating impact on consumers, small businesses, and local governments, but would make the price of financing our nation’s debt even more costly. At a minimum, the shock to our nation’s confidence from our first-ever downgrade could prove more costly than we can even fathom.”

By:  J. Miles Layton