Monday, August 8, 2011

For the Record: The WHY of the S&P Downgrade

While the S&P downgrade is less significant than it's made out to be, don't let the Teahadists fool you.  This is not a case of "both sides are to blame," S&P holds only the Tea Party GOP to account here.  So if you run into any Tea Zombies telling you that "both sides" are to blame for the S&P downgrade (or, more likely, it's the Nazi Socialist Kenyan Muslim in the White House is to blame!), you can quote this directly from the S&P Report:
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.

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. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy.

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