WASHINGTON — Standard & Poor’s removed the United States government from its list of risk-free borrowers for the first time on Friday night, a downgrade that is freighted with symbolic significance but carries few clear financial implications.This was inevitable, of course, since the government has STILL not made much progress in cutting our massive federal deficit each year. The debt ceiling agreement made little difference (an after-the-fact analysis earlier this week showed that a large part of the so-called "cuts" were just accounting tricks), and the administration has yet to present even a draft plan for reducing the long term deficit. The Republicans produced a plan (the Ryan plan) many months ago, and although liberals attacked it savagely, they have yet to produce any plan of their own in response. The President's own commission (National Commission on Fiscal Responsibility and Reform, sometimes called the Simpson-Bowles commission) produced a plan months ago, and the President has pointedly ignored all of its recommendations.
The company, one of three major agencies that offer advice to investors in debt securities, said it was cutting its rating of long-term federal debt to AA+, one notch below the top grade of AAA. It described the decision as a judgment about the nation’s leaders, writing that “the gulf between the political parties” had reduced its confidence in the government’s ability to manage its finances.
So I agree with S&P - the US debt deserves to be downgraded unless and until the administration comes up with a viable plan to reduce the deficit and the debt.
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