Remember when the president suddenly offered the Republicans a grand bargain on deficit reduction and put entitlements on the table if the Republicans would only consider eliminating tax loopholes for private jet owners and other millionaires? Remember how so many progressives howled about the betrayal? Imagine what the world would like today if the president had not taken that step.
A cornerstone of the global financial system was shaken Friday when officials at ratings firm Standard & Poor’s said U.S. Treasury debt no longer deserved to be considered among the safest investments in the world.
S&P removed for the first time the triple-A rating the U.S. has held for 70 years, saying the budget deal recently brokered in Washington didn’t do enough to address the gloomy outlook for America’s finances. It downgraded long-term U.S. debt to AA+, a score that ranks below more than a dozen governments’, including Liechtenstein’s, and on par with Belgium’s and New Zealand’s…
…The downgrade from S&P has been brewing for months. S&P’s sovereign debt team, led by company veteran David T. Beers, had grown increasingly skeptical that Washington policy makers would make significant progress in reducing the deficit, given the tortured talks over raising the debt ceiling. In recent warnings, the company said Washington should strive to reduce the deficit by $4 trillion over 10 years, suggesting anything less would be insufficient.
Negotiations to reach that threshold collapsed, and political leaders instead agreed to a last-second deal to cut the deficit by between $2.1 trillion and $2.4 trillion, making a downgrade almost unavoidable. When the $4 trillion deal fell apart, some Obama administration officials immediately warned that a downgrade from S&P was a real possibility.
You have probably been subjected to an endless litany from progressives that this was all a fake crisis and that we don’t really have a debt problem. That was never true. We do have a debt problem. We have a debt problem because Standard & Poor has come to the conclusion that we’ll never be able to raise revenues. The Republicans’ ideology has ruined our credit rating. The president could have been blamed for this downgrade if he hadn’t shown a willingness to put entitlements on the table. In that case, both sides would be equally to blame. But the president wisely took the necessary action to protect our credit rating, and he was rebuffed when Eric Cantor and then John Boehner walked out of the negotiations.
