Few outside of Washington appeared to believe the partisan game of chicken being played by Congress and the White House over the debt ceiling issue was a necessity, but it at least didn’t seem to do any real damage. That was until the weekend, when Standard & Poor’s stripped the United States of its prestigious AAA rating on what it described as unease with a political “brinksmanship” that shook its confidence in the nation’s ability to deal with its large debt with the highest level of proper or efficient manner.
S&P lowered its long-term sovereign credit rating for the United States from the top level to AA+, with its short-term rating being affirmed at A-1+. Additionally, the outlook on the long-term rating is viewed as “negative” by S&P, which hit hard at federal lawmakers over the political theatrics associated with the debt-ceiling debate an increasing number of analysts are characterizing as an unnecessary, manufactured controversy.
“We lowered our long-term rating on the U.S. because we believed 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,” said S&P in a statement.
The agency continued its bashing in an uncharacteristically long eight-page report explaining the rating downgrade saying the agency was “pessimistic about the capacity of Congress and the Administration” to govern properly during a challenging economic period. S&P also noted it was wary of the current crop of lawmakers effectively tacking structural debt issues or a needed lift to the spirit of bipartisan cooperation before the 2012 presidential election.
Brian Shappell, NACM staff writer