BLOG VIEW: The decision by Standard & Poor's (S&P) to downgrade the credit rating of the U.S. and various federal entities should not have come as a surprise to anyone who is even vaguely familiar with the government's dismal approach to financial management. What is surprising, however, is Treasury Secretary Timothy Geithner's response to this decision. In several interviews, Geithner made strange comments that reaffirm a thought too many people have shared for too long: he should never have been put in charge of the Treasury.
For most of his tenure at the Treasury, Geithner has been conspicuously uncomfortable in dealing with the media. Before the S&P brouhaha broke out, there were contradictory rumors floating around that he was eager to get out of his job prior to next year's presidential election. But in the aftermath of the S&P decision, Geithner suddenly found himself addicted to media interviews.
Unfortunately, Geithner never took any responsibility for the rating agency's downgrades. In a classic political response, he extended the finger of blame to his opposition.
‘Congress ultimately owns the credit rating of the United States,’ he said in an NBC interview. ‘They have the power of the purse on the Constitution. And they're going to have a chance now to earn back the confidence of investors around the world.’
But where is the president in all of this? Geithner didn't forget his boss during the NBC chat.
‘You've seen the president work incredibly hard and make really amazing progress trying to heal the damage caused by this terrible crisis,’ he continued. ‘And you saw him work his heart out to try and bring both parties together to reach agreement on a long-term fiscal deal. Made some progress – didn't solve it all, but a very good down payment.’
Huh? Since January 2009, hasn't the federal deficit, the U.S. trade deficit and U.S. unemployment gone up while housing prices have collapsed? Is that ‘amazing progress’? And as for working ‘his heart out’ on the fiscal deal, wasn't the final deal negotiated by Senate leaders Harry Reid and Mitch McConnell after the president conspicuously stepped away from the negotiations? Where is Geithner getting his information?
If that were not confusing enough, Geithner extended blame further in a CNBC interview. In this case, however, his problem was not with the S&P downgrade, but with S&P itself.
‘S&P has shown really terrible judgment, and they've handled themselves very poorly,’ he insisted. ‘And they've shown a stunning lack of knowledge about basic U.S. fiscal budget math.’
Of course, that last sentence presents a terrific setup for smart aleck comments about ‘U.S. fiscal budget math,’ but this is not a matter for cheap jokes. It is a deadly serious situation that has resulted in upheaval across the world's stock markets and a new wave of agitation among Americans who have been bearing the brunt of the administration's failed fiscal policies.
Geithner also did the patriotic rah-rah bit in his CNBC interview by insisting that U.S. government securities are the best investment available today.
‘Everyone can be confident, both here and around the world, that Treasuries are the most liquid, the strongest place to put your money at a time like this,’ he insisted.
Personally, if I wanted a strong and liquid place to put my money, I'd rather dust off my 1970s-era waterbed and put my money beneath its heavy frame – and keep it there until we have a competent individual running the Treasury again.
– Phil Hall, editor, Secondary Marketing Executive
(Please address all comments regarding this opinion column to hallp@sme-online.com.)
