How Congress put our credit rating at risk By Ezra Klein

[dkf]

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So in under a year, Standard Poor’s has moved us from a three-to-five-year timeframe for a plan to 90 days. The question is, “why?”

This morning, I spoke with David Beers, director of Standard Poor’s sovereign-debt division. He didn’t think there was much to explain. “We live in a dynamic world,” Beers said. “The idea that we or anybody else who does analysis around U.S. public finances would have a fixed and unvarying view over time is simply naive.”

Agreed on the dynamic-world thing, of course. But what was it, precisely, that changed S&P’s view?

In Beers’ telling, it was primarily politics. The growth outlook wasn’t any better than it had been in April, but it wasn’t substantially worse. Nor had the debt burden increased with unexpected speed. It was Washington that had unsettled them. The update was clear about this. The title was “United States of America ‘AAA/A-1+’ Ratings Placed On CreditWatch Negative On Rising Risk Of Policy Stalemate” — italics mine.

“What we’re saying now,” explains Beers, “is we question whether despite all the discussions and intense negotiations, if they can’t reach this agreement, will they be able to reach it after the election?”

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So S&P is literally saying that America is not acting like a country that deserves a AAA-credit rating. Nice job, Congress.

http://www.washingtonpost.com/blogs/ezra-klein/post/how-congress-put-our-credit-rating-at-risk/2011/07/11/gIQA3WxhTI_blog.html