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.(Bolding mine.)
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.
They can call it "policymaking uncertainty" if they like, but it seems like they saw that it's actually pretty certain that the current Congress will continue to screw about regarding doing what it takes to get on track--because the policymakers have already telegraphed as much. I tend to think that the market is also responding in a tangible way to an economic outlook where the government is not actively engaged in stimulating the economy, which did not fully climb out of the recession.
Or that's my take, anyway. In other words, yeah. I blame the GOP.
And damnit, I've written about the frigging debt ceiling thing again.
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