S&P Downgrades US Credit Rating

Friday night Standard & Poor’s took the unprecedented step and downgraded the U.S. credit rating for the first time ever.  The rating dropped from AAA to AA+ after the debt ceiling deal failed to satisfy worries about the state of the economy and the ability of the US to raise enough revenue to match spending obligations.

The impact of a credit downgrade could mean higher borrowing costs for consumers and businesses and it becomes more expensive for the U.S. to borrow money.  State and local governments will feel an impact in funding, especially schools and parks.  The first indication of a wider reach will happen Sunday night with the open of the Asian markets.

In the announcement S&P laid out blame squarely on the dysfunction in Washington, paying specific attention to the use of the debt ceiling as a partisan bargaining chip.

The U.S. long-term credit forecast was also negative, but with one bright spot.  Let the Bush tax cuts lapse, the report said, and the debt dynamics should change enough to stabilize the long-term rate at AA+.

Raising interest rates on struggling consumers and state and local governments at the same time drastic programmatic funding cuts take place is precisely the thing to drive this country back into a deep recession.  Which, given the statements by Republican leadership, looks more and more intentional.

Related Stories:

82 Disapproval Rate For Congress Lowest Ever

Grover Norquist The Man Behind Our Revenue Problem

 

Photo from artemuestre via flickr.

129 comments

W. C
W. Cabout a month ago

Thanks.

SEND
William C
William Cabout a month ago

Thank you.

SEND
Glenn M.
Glenn Meyer6 years ago

Eric L.

The solution is to stop the hemoraging of U.S. jobs and industries to foreign countries. Did you know that businesses actually get a tax break for out-sourcing industries to foreign countries?

Tax breaks for TRUE job creators in this country and tax penalties for those jumping ship is the only job plan that will work.

Protectionist? You bet. We protect our businesses with all kinds of import export laws. I am not sure why because they have become deficient in providing jobs, prosperity, or tax income for governments. If it were truly an international economy then we would not have tarrifs and trade laws.

It is only labor that is part of the international economy and unless people can change their thinking about protecting labor as well as businesses, then we are headed for the "worst financial collapse since the great depression." We have not had that happen yet. We had a wake up call and the polititions, the media, and the people are still asleep.

Innovation will not work because when the business is created the jobs will be out-sourced. Education will not work because engineers are already being out-sourced. It is just that business have no use for anyone that has not benefited from higher education. I guess everyone else will just have to "eat cake."

Buy gold.

SEND
Eric Lees
Eric Lees6 years ago

Glenn, So what would be your solution to create jobs here in America?

Frances, our credit worthiness is based on our ability to pay back our debt. How can you blame the tea party for our ballooning national debt? And what would be your solution?

SEND
Grace Adams
Grace Adams6 years ago

Anybody for government by voting directly on citizen initiated propositions? Then we could skip having a legislature altogether.

SEND
Frances C.
Frances C6 years ago

Had enough tea? We have to vote these radical right wing Republican tea baggers out before they completely destroy our country. In our history the debt ceiling was raised on its own without tea party junk attached every single time. Oh, thats right they don't read history, they listen to Fox.

SEND
pete M.
peter m6 years ago

Deputize the competent unemployed returning vets put them on the Mexican border end of crisis.

SEND
Will Rogers
Will Rogers6 years ago

Once again, I will not be happy till I see a computer take a politicians job. If everyone else can lose their jobs to computers why not them? These smirking lying obfuscating thieving narcissists. They've taken the place of kings and feudal lords. We are still Serfs to them, pawns to be moved in their games. And it doesn't matter what happens with the economy they will still be rich. The poor will be a little poorer, and the middle class will be a little closer to the poor. But people still trust them, even though they mess up all the time. I mess up once and they'll fire me. But they have the protection afforded to kings and princes. I would rather vote for a machine I swear to god! Than be sent to war by someone who will not sacrifice their own children before mine. One day we will have a true democracy where everyone who pays taxes including Felons' everyone! Will be able to vote. (no taxation without representation) on every decision. Using phone voting, lottery machines, E-voting. Where we vote for Policy's and not for people.

SEND
Glenn M.
Glenn Meyer6 years ago

Cutting spending on so called entitlements means cutting spending on the middle class voters. Those that advocate this also advocate that the wealthy and fictional entity corporations not pay taxes. The only explanation for that is for the creation of jobs. But where?

Corporations have over-powered our government which now believes that out-sourcing and off-shoring is inevitable and necessary with expectations that the middle class should just fall on their swords.

The eroding of U.S. jobs from out-sourcing and off-shoring will continue and measures to cut spending on entitlements will only marginally reduce the deficit. It does very little for the middle class voters and the jobs and tax base being artificially removed from our economy.

The financial collapse borders on national security with the loss of our middle class tax base and yet this nation does nothing, not even protest against out-sourcing and off-shoring and demand it be restricted by whatever method. International businesses are doing the un-American activity of destroying U.S. salaries, U.S. businesses that hire within this country, and destroying the U.S. marketplace as an end result.

Infrastructure spending and tax breaks will not create enough jobs to keep up with out-sourcing and off-shoring.

Neither party will do anything about it and unless we begin grass roots efforts to protest out-sourcing and off-shoring of U.S. jobs we will deserve what we get.

If nothing is done, it will get a

SEND
Igor M.
Igor m6 years ago

Without knowing what these guys - S&P - actual reasons were ... Look, does anyone on this blog believe that would have happened if not for the gridlock in the Congress? This debt-ceiling would have been routinely raised and NO ONE - once again NO ONE, no agency - would have the thrown a fit.

They made a mistake by about two trillions, as I have heard. When that has been pointed out to them, they corrected their math and said "Oh, well, does not matter, still downgraded". So, that is not about the "adherence of the US to spending". It is about the instability and unpredictability in policy making.

A big hearty 'Thank You' goes here to all our Republican, Tea Party, and some Democratic elected representatives. I would not be calling it an economic treason, not yet, altough there are way richer than just bad economy consequences to that. But agree, there is this nagging feeling that they have set up their own people.

Don't know if that was the plan ... If yes and to bring Obama down they will not stop at bringing us all down - well, I guess the voters deserve what they have voted for. Just hurts to see that kids, non-voting and voting differently population will be suffering the consequences. If no, and they simply did not know when it was the time to stop (I personally do not believe in that but let us give them a benefit of the doubt), then they are idiots and should be fired.

Hardly they will be. I would not underestimate the voters' gross myopy with spreadi

SEND