From the S&P report (via HollyontheHill):

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. Thestatutory debt ceiling and the threat of default have becomepolitical bargaining chips in the debate over fiscal policy. Despite this year’s wide-ranging debate, in our view, the differences between political parties have proven to be extraordinarily difficult to bridge, and, as we see it, the resulting agreement fell well short of the comprehensive fiscal consolidation program that some proponents had envisaged until quite recently…. In addition, the plan envisions 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.

Our opinion is that elected officials remain wary of tackling the structural issues required to effectively address the rising U.S. public debt burden.


6 responses to “Downgrade.

  1. Wow – do you really not see the inconsistency between the snarky graphic you’ve posted and the reasons the S&P itself gave for the downgrade? It’s clear that had we done what we’ve done dozens and dozens of times before, under administrations from both parties, and raised the debt ceiling, the downgrade would not have happened. The Tea Party is responsible for the downgrade. Period. It’s a self-inflicted wound.

    • Word: the content actually references the lack of willingness to address entitlements and Medicare. Newsflash: entitlement expansion has been Obama’s signature achievement, even by his own behest. Further, Obama has repeatedly and doggedly used the car metaphor to explain why Democrats should retain the White House and the Congress. The issue here is not the debt ceiling alone, but the failure to accompany any raise with reform of entitlements, which was, as I noted, specifically cited by the S&P. Explain how that’s out of wack with the snark. (I prefer to call it satire).

      Apropos: the rule in politics is “what have you done for me lately?” The debt debate was last week, and Obama is judge by his performance, not the failure of past administrations or past congresses. He fails, and we judge him accordingly, we don’t give him a pass because he’s “just as bad as others in the past.”

  2. So are we really more divided than ever, or are the extremes of both sides more vocal these days? I think if S&P would have been around to rate us at other tubulent times in our history, we would have faired the same.

    I also think it’s funny that an institution that had a huge hand in creating the current economic climate, and failed to foresee the recession, believes it can accurately read the tea leaves of US politics well enough to justify the downgrade.

    Nonetheless, it’s a shame we’re at this point.

    • Agreed, Sterfriv. Agreed.

      Even so, it will still cost the United States more to obtain debt, now. I believe, according to what I’ve read, that the average time for countries who have been downgraded to obtain their previous status is between 9 – 18 years, assuming that they take the steps necessary. With an economy and a government as large as ours (and I don’t say that to be derogatory–just that we’re a big country with a big government, relatively speaking), it will be difficult to fix things.

  3. Let’s be clear — the S&P identified spending, particularly on entitlements, as one reason for its downgrade decision, and the “political brinksmanship” about raising the debt ceiling (mentioned in the portion to which you cite) as the other reason. It’s clear that neither of these reasons, alone, would have been sufficient for S&P’s decision.
    The spending/debt problem has been building for a decade, was created by the actions of both parties, and will require a great deal of work and time to sustainably solve. The Tea Party’s brinksmanship on the debt ceiling created the second reason for the downgrade. Both parties are to blame for the first reason. The Tea Party is entirely responsible for the second.
    The S&P itself has explained that both reasons, together, led to the downgrade. One is complex and not instantaneously soluble. The other was entirely avoidable, and manufactured by the Tea Party.
    Efforts to pin this on President Obama, alone, are so irrational and indefensible as to be laughable. Defending those efforts by citing to “the rule in politics” reveals the entire argument to be just another example of the kind of cynical power-play partisanship that the American People are decrying and, come next year, will be rejecting at the polls.

    • So…President Obama has not been using the car metaphor for a year and a half? And he is not at the wheel in that metaphor? And would not be at the wheel if we went off a cliff? Sorry, Steve, but he opened the door: he’s failed as a leader and he’s insisted that he should keep the keys. Both parties may share the blame for the current situation, but he’s insisting that he has done a good enough job to merit a second term, and he just hasn’t. The onus is on him to prove himself, and he’s just not doing it.

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