Readers are doubtless aware that today, Standard & Poor's changed its rating of US Treasury securities from 'stable' to 'negative'. As CNBC reported:
Standard & Poor's ... believes there's a risk U.S. policymakers may not reach agreement on how to address the country's long-term fiscal pressures.
"Because the U.S. has, relative to its 'AAA' peers, what we consider to be very large budget deficits and rising government indebtedness and the path to addressing these is not clear to us, we have revised our outlook on the long-term rating to negative from stable," the agency said in a statement.
In an interview with CNBC, David Beers, S&P's global head of sovereign ratings, said the agency has been "struck increasingly by the difference in how other governments are dealing with fiscal consolidation."
"The U.S. to us looks to be an increasing outlier in that context," Beers added.
There's more at the link. Bold print is my emphasis.
I've written about this issue many times before, so I won't bother to repeat points I've already made. Suffice it to say that I'm not in the least surprised by S&P's move; indeed, my only surprise is that other major ratings agencies haven't (yet) done likewise.
Karl Denninger put it very well, I thought:
I have long said that the hubris of our government is unprecedented - and unwarranted. That the world and markets would not wait for 30 years or more to see us "turn a fiscal corner", as Ryan and the so-called "Tea Party" seemed to think they had.
Well, now the truth is in front of your face. S&P wants to see fiscal restraint right now and a defined timeline on those changes - and not Ryan's timeline either:
"We believe there is a material risk that U.S. policymakers might not reach an agreement on how to address medium- and long-term budgetary challenges by 2013; if an agreement is not reached and meaningful implementation does not begin by then, this would in our view render the U.S. fiscal profile meaningfully weaker than that of peer 'AAA' sovereigns."
Fix it now gentlemen and have actual results by 2013 or we lose our "AAA" rating.
CONGRESS AND THE ADMINISTRATION MUST STOP THE DEFICIT SPENDING.
NOT PROMISE TO DO IT IN 2040 BY WHICH TIME ALL THE CLOWNS WHO MADE THE PROMISE WILL BE OUT OF OFFICE OR DEAD - YOU MUST INSTEAD PUT IN PLACE VERIFIABLE AND SERIOUS PLANS TO DO IT RIGHT NOW WITH ACTUAL IMPLEMENTATION NO LATER THAN 2013.
That's what was just said by S&P. Ignore it if you wish, but the fact of the matter is that all the money-printer games and lies from Congresspeople just ran into a problem: The door got slammed closed on your kleptocratic fingers.
Again, more at the link. Bold print is Mr. Denninger's emphasis.
Note that President Obama continues to call for the US sovereign debt limit to be increased by Congress and the Senate. As far as he's concerned, deficit spending will continue until it's someone else's problem. He seems to have forgotten what he said back in 2006:
"The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can't pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government's reckless fiscal policies. ... Increasing America's debt weakens us domestically and internationally. Leadership means that 'the buck stops here'. Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better."
Clearly, he didn't mean it . . . which is one of the reasons we're in this mess today.
One US Senator clearly does "get it":
Throwing down the gauntlet, Republican Sen. Jim DeMint threatened Monday to block a vote in Congress on raising the U.S. debt ceiling unless he wins a balanced-budget amendment to the Constitution.
The filibuster threat comes a day after Treasury Secretary Tim Geithner suggested Republican leaders had offered private assurances to the White House that they ultimately would vote to raise the $14.3 trillion ceiling, regardless of whether a deal is reached on long-term spending cuts.
Publicly, Republicans say they will demand spending cuts as a condition for supporting a hike in the debt ceiling. They stood by that claim following Geithner's comments, and DeMint took their demands a step further.
"I will oppose any attempt to vote to raise the limit on our $14 trillion debt until Congress passes the balanced-budget amendment," the South Carolina conservative said. He first made the remarks to McClatchy, which his office confirmed to Fox News.
A balanced-budget amendment would prohibit the U.S. government from running a deficit. Such a provision would take a two-thirds vote in Congress, in addition to ratification by the states.
More at the link.
I hope and pray Senator DeMint's efforts succeed. They may be our - and our childrens' - only hope for fiscal stability.