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Cleveland
Plain Dealer...
Politics
drove U.S. downgrade:
editorial
By The Plain Dealer Editorial Board
Tuesday, August 09, 2011
Standard
& Poor’s decision to
downgrade the credit rating of the U.S. government was based, for
better or for
worse, on political considerations. That became clear almost
immediately Friday
night, when it was reported that, even after Treasury officials pointed
out a
$2 trillion mistake in S&P’s calculations, the ratings agency
simply
rewrote its rationale to emphasize political, rather than economic,
underpinnings for the move.
In
a statement explaining its
decision, S&P said, “The political brinksmanship of recent
months
highlights what we see as America’s governance and policymaking
becoming less
stable, less effective and less predictable than what we previously
believed.”
Translation:
Washington is in even
worse shape than we imagined. Put that way, S&P’s judgment in
many ways
echoes what this editorial board said throughout the highly partisan
battle
over the U.S. debt ceiling.
But
going a step further to downgrade
the nation’s credit status seems a premature move -- one neither
Moody’s nor
Fitch, the other two major ratings services, has chosen to emulate.
Perhaps
S&P, which failed so
spectacularly to detect the weaknesses in mortgage-based securities
that helped
trigger the Great Recession, is simply trying to re-establish itself as
a tough
cop in the marketplace. But by firing off a bombshell when
international
markets were already roiling at the end of last week, S&P
became part of
the political maelstrom it decried.
In
response, the Obama administration
and its allies criticized the agency and the GOP’s Tea Party wing,
while
Republicans touted the conclusion as evidence that the Democrat in the
White
House is failing. Apparently GOP leaders failed to read S&P’s
pox-on-both-your-houses analysis, which criticized both Republican
opposition
to increasing revenues and Democratic reluctance to touch entitlements
as
evidence that Washington is incapable of meaningful fiscal reform.
Perhaps
S&P’s downgrade will shock
the capital enough that the “supercommittee” set up by last week’s debt
deal
will actually address those issues responsibly and decisively. That
might
persuade S&P to change its mind -- and give the American people
cause for
renewed optimism at last.
Read
it at the Cleveland Plain Dealer
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