STATEMENT: On Standard & Poor's Downgrading U.S. Credit to AA+
The markets have spoken and anyone who continues to insist that entitlements or taxes are off the table is condemning the US to second rate economic status and a permanent downgrade.
August 06, 2011
Yesterday’s ratings downgrade is the result of a completely self-inflicted wound. Washington was warned that it had to avoid both default and a downgrade, and instead played a high stakes game of chicken with the full faith and credit of the U.S. S&P’s downgrade decision is not a statement on the American economy, but an indictment of a dysfunctional political system and the willingness to use national default as a negotiating tactic to push for extreme ideological demands.
America’s credit rating is at a crossroads. We can choose to heed this message by finishing the deficit reduction job with a balanced plan that is composed mainly of entitlement cuts, closing tax loopholes and defense cuts, or we can squabble while our global standing continues to sink. The markets have spoken and anyone who continues to insist that entitlements or taxes are off the table is condemning the US to second rate economic status and a permanent downgrade.
Leaders from both parties should commit now to ensuring that the “super committee” isn’t a sham by resisting the urge to appoint only members who have already pledged to reject compromise. Republicans must back the ending of many major tax breaks. Democrats must support real entitlement reform. Together they must show that they hear the market message loud and clear, and that the ratings downgrade has changed the political calculus.
This is the moment where we decide whether we want America to be a AAA or AA nation.