S&P considering US AAA rating

[Lord Zentei]

Breaking, so no article yet.

S&P served notice it planned to downgrade U.S. AAA rating but is reconsidering, a senior administration official says.

Could mean anything at this point since they're "reconsidering".

[Surlethe]

Well, let's be honest. Our political system is dangerously close to malfunctioning. We kind of have it coming.

[Exonerate]

What are the chances the Federal Government will lean on them to prevent such a downgrade? Seems like something they'd want to heavily dissuade.

[Zaune]

Well, let's be honest. Our political system is dangerously close to malfunctioning. We kind of have it coming.

I would have chosen a rather stronger term than "malfunctioning", personally.

[Starglider]

What are the chances the Federal Government will lean on them to prevent such a downgrade? Seems like something they'd want to heavily dissuade.

More likely senior bank executives used the ratings downgrade as a bargining chip in private negotiations with their politicians.
Since Moody's chickened out on a proper downgrade and just put the US on 'negative outlook', I expect S&P will do the same.

[Lord Zentei]

What are the chances the Federal Government will lean on them to prevent such a downgrade? Seems like something they'd want to heavily dissuade.

Yeah, I was considering saying something along the lines of "someone must have undertaken some stiff negotiation behind closed doors" in the OP, but too early.The US doesn't need a downgrade with its current debt crisis, but as Surlethe says, frankly has it coming.

Maybe that will shock the government into better behaviour (hahaha).

[Surlethe]

Earlier this afternoon: http://blogs.abcnews.com/politicalpunch ... grade.html

Two government officials tell ABC News that the federal government is expecting and preparing for bond rating agency Standard & Poor’s to downgrade the rating of US debt from its current AAA value.

Official reasons given, one official says, will be the political confusion surrounding the process of raising the debt ceiling, and lack of confidence that the political system will be able to agree to more deficit reduction. A source says Republicans saying that they refuse to accept any tax increases as part of a larger deal will be part of the reason cited. The official was unsure if the bond rating would be AA+ or AA.

A third official says that S&P made a "serious mistake" in its analysis, "based on flawed math and assumptions," so the Obama administration is pushing back. But even though "S&P has acknowledged its numbers are wrong, it's unclear what they're going to do.," the official said.

S&P refused to comment.

Because of the pushback, the Obama administration is preparing for the downgrade but is not 100% positive it’s going to happen, officials said. And if the downgrade does happen, officials are not sure when it will happen.

Before ratings agencies issue a downgrade, there is often some back and forth that goes on behind the scenes. Treasury Department officials have been making the case for months that S&P should not downgrade US debt.

[Surlethe]

And a Marginal Revolution blog post:

1. The Republican Party made a big, big mistake passing up a chance for a “grand bargain” with Obama. It’s time to be a realist about revenue increases, rather than signaling ideological purity. And let’s get a better rather than a worse version of revenue increases, combined of course with significant spending cuts and a good, credible long-term fiscal plan, enforced by tough triggers. A lot of Republican or conservative intellectuals know better on revenue increases, and have said as such, but corruption, intellectual and otherwise, prevented their voices from being heeded in the larger political context.

2. Democrats need to choose on entitlements. Ross Douthat nails it. It’s time for Obama to lead.

3. I don’t expect anyone to change their mind at this point, but the “we should have had a much bigger stimulus” argument is unlikely to go down in intellectual history as the correct view. Instead, Ken Rogoff and Scott Sumner are likely to go down as the prophets of our times. We needed a big dose of inflation, promptly, right after the downturn. Repeat and rinse as necessary. But voters hate inflation and, collectively, we proved to be cowards. Too bad.

4. As a simple rule of thumb, if at this point, in response to this news, a commentator attacks the ratings agencies for their previous mistakes and stupid, corrupt behavior, it’s a sign the commentator is trying to muddy the broader issues at stake. Such commentators may well be correct in their criticisms, but probably they are not facing up to their recent mistakes and seeking to shift the blame. Watch out for this.

5. I’m not sure how markets will respond, and I don’t think that an alarmist reaction about the market would be appropriate. A letter grade is a letter grade and the facts on the ground did not change today. It may or may not lead to a major sell-off. Still, years from now today may well be seen as a turning point of significance.

6. If this really does happen, let’s hope it serves as the needed wake-up call. If it doesn’t, well, back to…

[Surlethe]

TRIPLE POST FTW

Breaking news:

http://online.wsj.com/article/SB1000142 ... malertNEWS

A mathematical error discovered late Friday by Treasury Department officials threw into limbo, at least temporarily, plans by ratings firm Standard & Poor's to downgrade the top-notch AAA credit rating the U.S. has held for 70 years, people familiar with the matter said.

The wild back and forth between the Treasury Department and S&P Friday afternoon illustrated the dramatic stakes as the ratings firm moved to downgrade the debt.

S&P officials still had not decided how to proceed and could move forward with a downgrade despite the issues raised by the White House, the people familiar with the matter said. A decision could come later Friday.

S&P officials notified the Treasury Department early Friday afternoon it was planning to downgrade the debt, a government official said, and the firm presented its report to the White House. S&P has previously warned such a downgrade might come if Washington didn't move to comprehensively tackle its long-term fiscal woes.

After two hours of analysis, Treasury officials discovered that S&P officials had miscalculated future deficit projections by close to $2 trillion. It immediately notified the company of the mistakes.

S&P officials later called administration officials back to say they agreed about the mistakes, though they didn't say whether it would affect the rating. White House officials remained waiting Friday evening to see what the company would do.

An S&P spokesman didn't return calls for comment.

Earlier this week, Fitch Ratings and Moody's Investors Service affirmed their triple-A ratings, citing the completion of a deal to raise the government's borrowing limit. Fitch, however, said it was continuing its review through the end of August.

Ratings agencies wield enormous financial power across the world's financial markets. After criticism over their overly optimistic ratings during the financial crisis of 2008, the agencies have tried to be more vigilant in monitoring financial conditions around the world. In Europe, the agencies have been aggressive in downgrading countries such as Greece and other smaller nations, eliciting criticism from some policy makers as well as investors.

The outcome of the standoff between the world's largest economy and a leading ratings firm is impossible to predict, but one thing appears clear: the tussle will do little to fix investors' battered confidence in the ability of leading countries to fix their fiscal problems. The U.S. is facing long-term budget shortfalls and a largely gridlocked political system.

A downgrade by S&P could serve as a psychological haymaker for an American economic recovery that can't find much traction. It could lead to the prompt downgrades of numerous companies and states, driving up their costs of borrowing. Policymakers are also feeling anxious about the hidden icebergs that the move could suddenly reveal.

But given the administration's pushback, markets could question the decision by S&P, particularly because rival firms Moody's Investors Service and Fitch Ratings have recently reaffirmed that the U.S. deserves their highest credit rating.

Credit ratings are assigned to government debt as a way of pricing the perceived risk that a country could default on its obligations. Countries viewed as high risk, such as Greece, have very poor credit ratings and high borrowing costs.

U.S. debt has been viewed for decades as the gold standard, and the country's perfect credit rating has allowed the government to borrow trillions of dollars at very low interest rates for years.

S&P has warned of a downgrade for weeks. S & P's sovereign debt team, lead by company veteran David T. Beers, had grown increasingly skeptical that Washington policy makers would make significant progress in reducing the deficit, given the tortured talks over raising the debt ceiling. In recent warnings, the company said Washington should strive to reduce the deficit by $4 trillion over 10 years, suggesting anything less would be insufficient.

Negotiations to reach that threshold collapsed, and political leaders instead agreed to a last-second deal to cut the deficit by between $2.1 trillion and $2.4 trillion, making a downgrade almost unavoidable. When the $4 trillion deal fell apart, some Obama administration officials immediately warned that a downgrade from S & P was a real possibility.

S&P officials conferred with a team from the Treasury Department earlier in the week to talk about the debt plan, and government officials tried to explain its scope. S&P officials ended their briefing with an air of mystery about what they might do, and Treasury officials were braced for an announcement later in the week, people familiar with the matter said.

[aerius]

Downgraded to AA+, credit watch negative. I didn't think they had the balls to do it. I'll see what it says on my newsfeed in a minute.

More from my feed: S&P says can lower U.S. rating again in next 2 years if sees less spending reduction than agreed, higher interest rates, new fiscal pressures

[Broomstick]

What are the chances the Federal Government will lean on them to prevent such a downgrade? Seems like something they'd want to heavily dissuade.

Oh, I am certain the Feds had something to say, and would strongly encourage not doing such a thing. 100% certain.

But as the banner headline on CNN is now reporting, S&P downgraded the US anyway, AAA to AA+

[Surlethe]

http://blogs.wsj.com/marketbeat/2011/08 ... s-release/

Standard & Poor’s took the unprecedented step of downgrading the U.S. government’s “AAA” sovereign credit rating Friday in a move that could send shock waves through global. The following is a press release from Standard & Poor’s:

– We have lowered our long-term sovereign credit rating on the United States of America to ‘AA+’ from ‘AAA’ and affirmed the ‘A-1+’ short-term rating.

– We have also removed both the short- and long-term ratings from CreditWatch negative.

– The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics.

– More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011.

– Since then, we have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us pessimistic about the capacity of Congress and the Administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government’s debt dynamics any time soon.

– The outlook on the long-term rating is negative. We could lower the long-term rating to ‘AA’ within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case.

TORONTO (Standard & Poor’s) Aug. 5, 2011–Standard & Poor’s Ratings Services said today that it lowered its long-term sovereign credit rating on the United States of America to ‘AA+’ from ‘AAA’. Standard & Poor’s also said that the outlook on the long-term rating is negative. At the same time, Standard & Poor’s affirmed its ‘A-1+’ short-term rating on the U.S. In addition, Standard & Poor’s removed both ratings from CreditWatch, where they were placed on July 14, 2011, with negative implications.

The transfer and convertibility (T&C) assessment of the U.S.–our assessment of the likelihood of official interference in the ability of U.S.-based public- and private-sector issuers to secure foreign exchange for debt service–remains ‘AAA’.

We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process. We also believe that the fiscal consolidation plan that Congress and the Administration agreed to this week falls short of the amount that we believe is necessary to stabilize the general government debt burden by the middle of the decade.

Our lowering of the rating was prompted by our view on the rising public debt burden and our perception of greater policymaking uncertainty, consistent with our criteria (see “Sovereign Government Rating Methodology and Assumptions,” June 30, 2011, especially Paragraphs 36-41). Nevertheless, we view the U.S. federal government’s other economic, external, and monetary credit attributes, which form the basis for the sovereign rating, as broadly unchanged.

We have taken the ratings off CreditWatch because the Aug. 2 passage of the Budget Control Act Amendment of 2011 has removed any perceived immediate threat of payment default posed by delays to raising the government’s debt ceiling. In addition, we believe that the act provides sufficient clarity to allow us to evaluate the likely course of U.S. fiscal policy for the next few years.

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. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy. Despite this year’s wide-ranging debate, in our view, the differences between political parties have proven to be extraordinarily difficult to bridge, and, as we see it, the resulting agreement fell well short of the comprehensive fiscal consolidation program that some proponents had envisaged until quite recently. Republicans and Democrats have only been able to agree to relatively modest savings on discretionary spending while delegating to the Select Committee decisions on more comprehensive measures. It appears that for now, new revenues have dropped down on the menu of policy options. In addition, the plan envisions only minor policy changes on Medicare and little change in other entitlements, the containment of which we and most other independent observers regard as key to long-term fiscal sustainability.

Our opinion is that elected officials remain wary of tackling the structural issues required to effectively address the rising U.S. public debt burden in a manner consistent with a ‘AAA’ rating and with ‘AAA’ rated sovereign peers (see Sovereign Government Rating Methodology and Assumptions,” June 30, 2011, especially Paragraphs 36-41). In our view, the difficulty in framing a consensus on fiscal policy weakens the government’s ability to manage public finances and diverts attention from the debate over how to achieve more balanced and dynamic economic growth in an era of fiscal stringency and private-sector deleveraging (ibid). A new political consensus might (or might not) emerge after the 2012 elections, but we believe that by then, the government debt burden will likely be higher, the needed medium-term fiscal adjustment potentially greater, and the inflection point on the U.S. population’s demographics and other age-related spending drivers closer at hand (see “Global Aging 2011: In The U.S., Going Gray Will Likely Cost Even More Green, Now,” June 21, 2011).

Standard & Poor’s takes no position on the mix of spending and revenue measures that Congress and the Administration might conclude is appropriate for putting the U.S.’s finances on a sustainable footing.

The act calls for as much as $2.4 trillion of reductions in expenditure growth over the 10 years through 2021. These cuts will be implemented in two steps: the $917 billion agreed to initially, followed by an additional $1.5 trillion that the newly formed Congressional Joint Select Committee on Deficit Reduction is supposed to recommend by November 2011. The act contains no measures to raise taxes or otherwise enhance revenues, though the committee could recommend them.

The act further provides that if Congress does not enact the committee’s recommendations, cuts of $1.2 trillion will be implemented over the same time period. The reductions would mainly affect outlays for civilian discretionary spending, defense, and Medicare. We understand that this fall-back mechanism is designed to encourage Congress to embrace a more balanced mix of expenditure savings, as the committee might recommend.

We note that in a letter to Congress on Aug. 1, 2011, the Congressional Budget Office (CBO) estimated total budgetary savings under the act to be at least $2.1 trillion over the next 10 years relative to its baseline assumptions. In updating our own fiscal projections, with certain modifications outlined below, we have relied on the CBO’s latest “Alternate Fiscal Scenario” of June 2011, updated to include the CBO assumptions contained in its Aug. 1 letter to Congress. In general, the CBO’s “Alternate Fiscal Scenario” assumes a continuation of recent Congressional action overriding existing law.

We view the act’s measures as a step toward fiscal consolidation. However, this is within the framework of a legislative mechanism that leaves open the details of what is finally agreed to until the end of 2011, and Congress and the Administration could modify any agreement in the future. Even assuming that at least $2.1 trillion of the spending reductions the act envisages are implemented, we maintain our view that the U.S. net general government debt burden (all levels of government combined, excluding liquid financial assets) will likely continue to grow. Under our revised base case fiscal scenario–which we consider to be consistent with a ‘AA+’ long-term rating and a negative outlook–we now project that net general government debt would rise from an estimated 74% of GDP by the end of 2011 to 79% in 2015 and 85% by 2021. Even the projected 2015 ratio of sovereign indebtedness is high in relation to those of peer credits and, as noted, would continue to rise under the act’s revised policy settings.

Compared with previous projections, our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act. Key macroeconomic assumptions in the base case scenario include trend real GDP growth of 3% and consumer price inflation near 2% annually over the decade.

Our revised upside scenario–which, other things being equal, we view as consistent with the outlook on the ‘AA+’ long-term rating being revised to stable–retains these same macroeconomic assumptions. In addition, it incorporates $950 billion of new revenues on the assumption that the 2001 and 2003 tax cuts for high earners lapse from 2013 onwards, as the Administration is advocating. In this scenario, we project that the net general government debt would rise from an estimated 74% of GDP by the end of 2011 to 77% in 2015 and to 78% by 2021.

Our revised downside scenario–which, other things being equal, we view as being consistent with a possible further downgrade to a ‘AA’ long-term rating–features less-favorable macroeconomic assumptions, as outlined below and also assumes that the second round of spending cuts (at least $1.2 trillion) that the act calls for does not occur. This scenario also assumes somewhat higher nominal interest rates for U.S. Treasuries. We still believe that the role of the U.S. dollar as the key reserve currency confers a government funding advantage, one that could change only slowly over time, and that Fed policy might lean toward continued loose monetary policy at a time of fiscal tightening. Nonetheless, it is possible that interest rates could rise if investors re-price relative risks. As a result, our alternate scenario factors in a 50 basis point (bp)-75 bp rise in 10-year bond yields relative to the base and upside cases from 2013 onwards. In this scenario, we project the net public debt burden would rise from 74% of GDP in 2011 to 90% in 2015 and to 101% by 2021.

Our revised scenarios also take into account the significant negative revisions to historical GDP data that the Bureau of Economic Analysis announced on July 29. From our perspective, the effect of these revisions underscores two related points when evaluating the likely debt trajectory of the U.S. government. First, the revisions show that the recent recession was deeper than previously assumed, so the GDP this year is lower than previously thought in both nominal and real terms. Consequently, the debt burden is slightly higher. Second, the revised data highlight the sub-par path of the current economic recovery when compared with rebounds following previous post-war recessions. We believe the sluggish pace of the current economic recovery could be consistent with the experiences of countries that have had financial crises in which the slow process of debt deleveraging in the private sector leads to a persistent drag on demand. As a result, our downside case scenario assumes relatively modest real trend GDP growth of 2.5% and inflation of near 1.5% annually going forward.

When comparing the U.S. to sovereigns with ‘AAA’ long-term ratings that we view as relevant peers–Canada, France, Germany, and the U.K.–we also observe, based on our base case scenarios for each, that the trajectory of the U.S.’s net public debt is diverging from the others. Including the U.S., we estimate that these five sovereigns will have net general government debt to GDP ratios this year ranging from 34% (Canada) to 80% (the U.K.), with the U.S. debt burden at 74%. By 2015, we project that their net public debt to GDP ratios will range between 30% (lowest, Canada) and 83% (highest, France), with the U.S. debt burden at 79%. However, in contrast with the U.S., we project that the net public debt burdens of these other sovereigns will begin to decline, either before or by 2015.

Standard & Poor’s transfer T&C assessment of the U.S. remains ‘AAA’. Our T&C assessment reflects our view of the likelihood of the sovereign restricting other public and private issuers’ access to foreign exchange needed to meet debt service. Although in our view the credit standing of the U.S. government has deteriorated modestly, we see little indication that official interference of this kind is entering onto the policy agenda of either Congress or the Administration. Consequently, we continue to view this risk as being highly remote.

The outlook on the long-term rating is negative. As our downside alternate fiscal scenario illustrates, a higher public debt trajectory than we currently assume could lead us to lower the long-term rating again. On the other hand, as our upside scenario highlights, if the recommendations of the Congressional Joint Select Committee on Deficit Reduction–independently or coupled with other initiatives, such as the lapsing of the 2001 and 2003 tax cuts for high earners–lead to fiscal consolidation measures beyond the minimum mandated, and we believe they are likely to slow the deterioration of the government’s debt dynamics, the long-term rating could stabilize at ‘AA+’.

On Monday, we will issue separate releases concerning affected ratings in the funds, government-related entities, financial institutions, insurance, public finance, and structured finance sectors.

[The Spartan]

Wall Street is going to shit a brick on Monday.

Hostage taking indeed...


Edit: to clarify, I'm referring to Mitch McConnell admitting that they took the economy hostage.

[Lord Zentei]

Well, I hope the Republicans and Obama alike are happy with themselves. What a load of bullshit smoke and mirrors this has been; no surprise that this was the outcome. There's only so much you can pull.

[J]

Some background. S&P wanted to see at least $4 trillion in deficit reductions over ten years to reaffirm America's AAA rating. Where that figure came from I have no idea, anyway, it wasn't met so a downgrade was baked in. I thought they'd do it in a couple weeks around OPEX day to maximize market mayhem, for once, I wasn't early.

[Lord Zentei]

Can the SEC strip S&P's classification as a credit rating agency? I say, if they wanna play hardball, return the serve.

Nobody would buy it, and other credit rating agencies might follow suit. In fact that might be highly counterproductive.

Besides, there are credit rating agencies outside the US (note that this article was posted before S&P made their final decision):

Beijing (CNN) -- Although the United States narrowly avoided an unprecedented default following congressional approval of a last-minute compromise plan to raise the debt ceiling, China's leading credit rating agency Wednesday downgraded U.S. sovereign debt after putting it on negative watch last month.

The Dagong Global Credit Rating Company, which lowered the United States to A+ last November after the U.S. Federal Reserve decided to continue loosening its monetary policy, announced a further downgrade to A, indicating heightened doubts over Washington's long-term ability to repay its debts.

It said the gloomy assessment -- much lower than the AAA ratings given by the so-called "big three" Western agencies Moody's, Fitch, and Standard and Poor's -- was inevitable given the level of market concern generated by the stalemate between Democrats and Republicans over the debt ceiling.

"The squabbling between the two political parties on raising the U.S. debt ceiling reflected an irreversible trend on the United States' declining ability to repay its debts," Dagong Chairman Guan Jianzhong told CNN.

"The two parties acted in a very irresponsible way and their actions greatly exposed the negative impact of the U.S. political system on its economic fundamentals," he said.

Ironically, Dagong's move could hurt not just the United States but also China, the largest foreign owner of U.S. debt with holdings worth almost $1.2 trillion.

"Our downgrade simply reflects reality," Guan said. "Our rating didn't cause China to lose any money --- it was the inappropriately high ratings for the U.S. by Western agencies that had led China to make risky investments in U.S. debt."

Observers say China, whose foreign exchange reserves now stand at $3.2 trillion, has had little choice but to buy U.S. Treasury bonds.

"There aren't that many other markets that are as deep or as liquid as treasuries," said Patrick Chovanec, an economic analyst with Tsinghua University in Beijing. "When they accumulate reserves, this is the only place they can put them."

The privately held Dagong, founded in 1994 to rate Chinese companies, attracted worldwide attention last July when it published its first sovereign credit ratings and, citing growing deficits in the developed world, ranked China higher than the United States and Japan.

Dagong now rates 67 countries and aims to more than double the number by the end of this year. Its ambition to become an alternative to the "big three" suffered a setback, however, when the U.S. Securities and Exchange Commission refused to recognize its rating because of the commission's inability to supervise the Beijing-based agency.

Guan, who worked as a civil servant and a Wall Street accountant before taking the helm at Dagong, is quick to defend his firm's independence and objectivity. He points to what he calls Western agencies' "double standard" in rating the U.S. and European economies to underscore the global need for a newcomer like Dagong.

"People are used to credit ratings issued by the 'big three,' but the financial crisis has clearly proved them wrong," Guan said. "They can no longer shoulder the responsibility of rating the world."

"That's the role we are striving to play," he added.

[Cecelia5578]

Well, I hope the Republicans and Obama alike are happy with themselves. What a load of bullshit smoke and mirrors this has been; no surprise that this was the outcome. There's only so much you can pull.

I don't get it-the Dems offered a deal that would've preserved the AAA rating, the Republican's deep sixed it, and its Obama's fault?

[J]

Wall Street is going to shit a brick on Monday.

The real carnage takes place if/when Fitch or Moodys gets around to making their own downgrades. As some of you may know, there are countless pension funds, mutual funds & other funds which are required to hold only AAA rated debts in their portfolios, these funds hold quite a few hundred billions worth of US debts. If two or more of the big three ratings agencies downgrade the US from AAA, those funds are forced to dispose of their US debt holdings. That is when the fecal matter hits the fan.

[Lord Zentei]

Well, I hope the Republicans and Obama alike are happy with themselves. What a load of bullshit smoke and mirrors this has been; no surprise that this was the outcome. There's only so much you can pull.

I don't get it-the Dems offered a deal that would've preserved the AAA rating, the Republican's deep sixed it, and its Obama's fault?

Frankly, yes. He's shown time and again that he can be relied upon to cave to Republican pressure, and is more concerned about making it through the day's negotiations than showing leadership. This compromise of his was bullshit and everyone knows it, moreover it deferred the resumption of this until 2013, after the elections - which shows how much his promises are worth. You cannot blame this on the Republicans alone though obviously they deserve a huge share of the blame.

[Flagg]

Well, I hope the Republicans and Obama alike are happy with themselves. What a load of bullshit smoke and mirrors this has been; no surprise that this was the outcome. There's only so much you can pull.

I don't get it-the Dems offered a deal that would've preserved the AAA rating, the Republican's deep sixed it, and its Obama's fault?

Frankly, yes. He's shown time and again that he can be relied upon to cave to Republican pressure, and is more concerned about making it through the day's negotiations than showing leadership. This compromise of his was bullshit and everyone knows it, moreover it deferred the resumption of this until 2013, after the elections - which shows how much his promises are worth. You cannot blame this on the Republicans alone though obviously they deserve a huge share of the blame.

That makes no sense. He didn't call the GOP's bluff and let the economy fall to shambles, so he's a worthless sellout? You don't think no deal at all would have downgraded the US Debt Rating across the board as opposed to it being just one agency using possibly suspect math?

And that "until 2013" thing is not just so he won't have to fight another hostage-taking of the debt limit before the election, it's because the rating agencies wanted a long term solution, so you're full of shit there as well.

[J]

I don't get it-the Dems offered a deal that would've preserved the AAA rating, the Republican's deep sixed it, and its Obama's fault?

They most certainly did not. S&P floated their $4 trillion over 10 years deficit reduction figure before the budget talks took place. None of the proposals from either side came close. So yes, it's Obama's fault as much as everyone else.

[Lord Zentei]

That makes no sense. He didn't call the GOP's bluff and let the economy fall to shambles, so he's a worthless sellout? You don't think no deal at all would have downgraded the US Debt Rating across the board as opposed to it being just one agency using possibly suspect math?

And that "until 2013" thing is not just so he won't have to fight another hostage-taking of the debt limit before the election, it's because the rating agencies wanted a long term solution, so you're full of shit there as well.

Obviously I wasn't advocating that he allow the economy to fall to shambles. I'm talking about his performance to date, the Republicans know his performance in negotiations of this sort; besides which it's not as if he fought for any viable plan of his own in the first place.

As for the 2013 date, that excuse means precisely jack and shit if the current deal is worthless, doesn't it?

[Broomstick]

They most certainly did not. S&P floated their $4 trillion over 10 years deficit reduction figure before the budget talks took place. None of the proposals from either side came close. So yes, it's Obama's fault as much as everyone else.

Nope, I'm saying the Republicans and the Tea Party deserve more than an even share of the blame, more than 50% on this one. There's fault to find with Obama on this one, but he's not the worst player in THIS particular event.

[Flagg]

That makes no sense. He didn't call the GOP's bluff and let the economy fall to shambles, so he's a worthless sellout? You don't think no deal at all would have downgraded the US Debt Rating across the board as opposed to it being just one agency using possibly suspect math?

And that "until 2013" thing is not just so he won't have to fight another hostage-taking of the debt limit before the election, it's because the rating agencies wanted a long term solution, so you're full of shit there as well.

Obviously I wasn't advocating that he allow the economy to fall to shambles. I'm talking about his performance to date, the Republicans know his performance in negotiations of this sort; besides which it's not as if he fought for any viable plan of his own in the first place.

Considering the fact that the Republicans walked out on him no less than twice and negotiated in bad faith, I'd say Obama comes out of this about as well as anyone could.

As for the 2013 date, that excuse means precisely jack and shit if the current deal is worthless, doesn't it?

No, because it was all 3 rating agencies demanding a long term debt ceiling increase, not just S&P. And it's hardly an "excuse".

[Flagg]

I don't get it-the Dems offered a deal that would've preserved the AAA rating, the Republican's deep sixed it, and its Obama's fault?

They most certainly did not. S&P floated their $4 trillion over 10 years deficit reduction figure before the budget talks took place. None of the proposals from either side came close. So yes, it's Obama's fault as much as everyone else.

Golden mean horseshit. Obama bent over backwards time and time again only to be walked out on by the Tea Party whipped GOP stooges running the House. I'm not going to say he's completely without fault, but it's not even close to his fault "as much as everyone else".