On Friday, the credit rating agency Standard & Poors downgraded the U.S. from AAA to AA+ in the first downgrade in U.S. history. In its release, S&P took Republicans to task for using the debt ceiling as a political football andrefusing to consider new revenues as an option for reducing the country’s long-term deficit. As National Journal put it, “it’s hard to read the S&P analysis as anything other than a blast at Republicans.”
However, you wouldn’t know that from reading the statements the GOP presidential candidates released in the wake of S&P’s announcement. In their world, the downgrade was entirely due to government spending, and the way to turn things around is to balance the budget without raising any additional revenue:
MICHELE BACHMANN: “We were warned by all of the credit agencies that a failure to deal with our debt would lead to a downgrade in our credit rating, but instead he submitted a budget that had a $1.5 trillion deficit and then requested a $2.4 trillion blank check.President Obama is destroying the foundations of the U.S. economy one beam at a time. I call on the President to seek the immediate resignation of Treasury Secretary Timothy Geithner and to submit a plan with a list of cuts to balance the budget this year, turn our economy around and put Americans back to work.”
MITT ROMNEY: “Standard & Poor’s rating downgrade is a deeply troubling indicator of our country’s decline under President Obama. His failed policies have led to high unemployment, skyrocketing deficits, and now, the unprecedented loss of our nation’s prized AAA credit rating.”
JON HUNTSMAN: “Out-of-control spending and a lack of leadership in Washington have resulted in President Obama presiding over the first downgrade of the United States credit rating in our history. For far too long we have let reckless government spending go unchecked and the cancerous debt afflicting our nation has spread.”
Of course, the S&P explicitly cited the fact that “new revenues have dropped down on the menu of policy options” as reason for the downgrade, pointing out that one way to get the U.S. on a more sustainable fiscal path is to allow the Bush tax cuts to expire:
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 [debt ceiling] act.
Yesterday, House Budget Committee Chairman Paul Ryan (R-WI) seemed to soften his anti-tax zeal just a bit in response to the downgrade, saying that he might be open to revenue positive tax reform. But for the GOP presidential hopefuls, S&P’s move was just another political hammer, regardless of S&P’s justification for its action.