Uncle Sam: Busted
On Monday, Standard and Poor’s (S&P) announced that although the US government would retain its AAA debt rating, the outlook for the United States’ future was being downgraded from “stable” to “negative.” The move is a welcome if tepid acknowledgement of the fiscal train wreck of which Austrians have been warning for years.
The S&P Announcement
The formal announcement of the downgraded outlook cited the federal government’s growing debt burden:
Standard & Poor’s on Monday downgraded the outlook for the United States to negative, saying it 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.
The White House tried to spin the news as an endorsement of the budget talks and of the fiscal approach laid out in President Obama’s recent speech. But even the allegedly “radical” Paul Ryan plan is grossly inadequate to grappling with the looming fiscal crisis.
And now… the rest of the story. …..
Harold
