When and how America brings down its debt shouldn't matter to Standard & Poor’s. The ratings agency wasn't doing its job in 2008, when it gave Wall Street's riskiest securities a AAA rating, and it's not doing its job now by hurting the US economy with an unnecessary downgrade.
The Standard & Poor’s downgrade of America’s debt couldn’t come at a worse time. The result is likely to be higher borrowing costs for the government at all levels, and higher interest on your variable-rate mortgage, your auto loan, your credit card loans, and every other penny you borrow.
Why did S&P do it?
Not because America failed to pay its creditors on time. As you may have noticed, we avoided a default.
And not because we might fail to pay our bills at the end of 2012 if tea-party Republicans again hold the nation hostage when their votes will next be needed to raise the debt ceiling. This is a legitimate worry and might have been grounds for a downgrade, but it’s not S&P’s rationale.
S&P has downgraded the US because it doesn’t think we’re on track to reduce the nation’s debt enough to satisfy S&P – and we’re not doing it in a way S&P prefers.