Reuters econoblogger Felix Salmon, discussing the proposed S&P downgrade earlier this evening:
Firstly, talk of debt-to-GDP ratios and the like is a distraction. You can gussy up your downgrade rationale with as many numbers as you like, but at heart it’s a political decision, not an econometric one.
Secondly, the US does not deserve a triple-A rating, and the reason has nothing whatsoever to do with its debt ratios. America’s ability to pay is neither here nor there: the problem is its willingness to pay. And there’s a serious constituency of powerful people in Congress who are perfectly willing and even eager to drive the US into default. The Tea Party is fully cognizant that it has been given a bazooka, and it’s just itching to pull the trigger. There’s no good reason to believe that won’t happen at some point.
Finally, it’s impossible to view any S&P downgrade without at the same time considering the highly fraught and complex relationship between the US government and the ratings agencies. The ratings agencies are reliant on the US government in many ways, and would be ill-advised to needlessly annoy the powers that be. On the other hand, the government has been criticizing them harshly for failing to downgrade mortgage-backed securities even when they could see that there were serious credit concerns. So by that measure they have to downgrade the US: the default concerns we saw during the debt-ceiling debate were real and can’t be ignored.[…]
Do the mandarins at S&P — people who, it seems, can’t even get basic macro sums right — really want to cost the US economy tens of billions of dollars a year by downgrading the country’s debt and causing all manner of potential market mischief as a result?
Looks like the answer is yes. My emphasis; much more detail at the link.
Steve Benen in the Washington Monthly, yesterday:
“What we have to be, I think, focused on is truth in budgeting here,” Cantor told The Wall Street Journal’s Opinion Journal. He said “the better way” for Americans is to “get the fiscal house in order” and “come to grips with the fact that promises have been made that frankly are not going to be kept for many.”
He added that younger Americans will have “ample time to try and plan our lives so that we can adjust” to the post-Medicare society…
[N]ote the rhetoric the oft-confused House Majority Leader uses: the United States has made promises to the public, and as far as Eric Cantor is concerned, “many” Americans will simply have to accept that those promises “are not going to be kept.”
Why not? Because Republicans say so. Promises to Grover Norquist are sacrosanct, but promises to senior citizens are not…
If national security! ! eleventy-one! requires that Gitmo remain open, why aren’t the patriotic Republicans demanding that Eric Cantor be renditioned there posthaste, so that Jack Bauer’s bastard offspring can use Whatever Means Necessary(tm) to get a complete list of the traitors and fifth-columnists whose goal is to destroy the American economy?