Saturday, July 16, 2011

S&P to Republicans: Time for the Adults to Take Over

Politicus USA reported that Standard & Poor's, the entity that rates the "credit" part of the United States' claim to "full faith and credit," released a policy update that endorsed the president's original negotiating position over the keep tax breaks for the oil industry stance of the House republican refuseniks. Basically, the rating agency has affirmed President Obama's initial bargaining position (the "grand" plan), that was summarily rejected by the leadership in the House. S&P clearly states the need to use a combination of revenue increases and cuts for a consolidated debt reduction plan of $4 trillion:
We expect the debt trajectory to continue increasing in the medium term if a medium-term fiscal consolidation plan of $4 trillion is not agreed upon. If Congress and the Administration reach an agreement of about $4 trillion, and if we to conclude that such an agreement would be enacted and maintained throughout the decade, we could, other things unchanged, affirm the 'AAA' long-term rating and A-1+ short-term ratings on the U.S.
The credit rating agency--which is no bastion of liberalism--decided to weigh in at a very detailed level, and essentially just told the republicans in the House of Representatives that their proposals were not serious and would result in a downgrade of the United States' debt rating.

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