Earlier this evening, Standard and Poors downgraded the U.S. long-term sovereign credit rating from AAA to AA+. Why? S&P’s reasoning says it all:
*”We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process.”
In other words, the Republicans and Tea Partiers holding the debt ceiling increase hostage to their demands did not go over well with Standard and Poors. Shocker! (not)
*”We also believe that the fiscal consolidation plan that Congress and the Administration agreed to this week falls short of the amount that we believe is necessary to stabilize the general government debt burden by the middle of the decade.”
Again, thank you Teapublicans for absolutely refusing to touch the revenues side of the equation. In fairness, Democrats weren’t exactly jumping up and down to deal with health care spending; also, Democrats should have pushed much harder for a public option when they had a chance, as this would have helped “bend the cost curve” of health care spending. But nooooo….
*”The political brinksmanship of recent months highlights what we see as America’s governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed.”
Political brinksmanship? Gee, who could S&P possibly be referring to on that one? Hmmmm.
*”It appears that for now, new revenues have dropped down on the menu of policy options… only minor policy changes on Medicare and little change in other entitlements, the containment of which we and most other independent observers regard as key to long-term fiscal sustainability.”
In this case, there’s blame to go around, as neither party was serious – with the exceptions of President Obama and, apparently, John Boehner before he was reined in by his own caucus – about dealing with entitlements. And no, the Ryan Plan, which most every Teapublican voted for, does not count as “serious.” It’s a complete joke.
*”…our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act.”
This one’s clearly the Teapublicans’ fault, essentially 100%, and is a big part of the reason why S&P believes the U.S. is not “likely to slow the deterioration of the government’s debt dynamics.” In short, thank you, Teapublicans, for destroying America’s credit rating!