An ABC News report suggests U.S. officials are prepping for the credit rating agency S&P to downgrade the country’s AAA bond rating to either AA or AA+. This would be a slight reduction stemming from the Congressional circus over the debt limit fight.
According to the initial report, S&P sees the GOP’s intransigence on taxes as a reason to suspect the country will not be likely to reduce deficits in the years ahead, and Republicans are already trying to get out from under the blame.
“Dear Mr. Obama, while you blame the GOP for the downgrade, your party controlled all of Washington for two years & extended the Bush cuts,” tweeted Red State founder Erick Erickson.Sen. Jim DeMint’s (R-SC) top communications adviser Amanda Carpenter likewise noted, “[y]ou guys may remember that @JimDeMint called the debt hike compomise a ‘downgrade deal.’ This is why.”
Depending on the specific terms of S&P’s downgrade this will be a hard line to hold. Spokesmen for S&P were not immediately available for comment.
It’s worth pointing out that other credit ratings agencies have reaffirmed the country’s AAA rating since the debt deal, and S&P has been unusually vocal about its downgrade threats in recent weeks. The consequences of the slight downgrade are unpredictable — they may or may not result in slightly higher interest rates, but it depends entirely on how seriously the credit markets take S&P’s political analysis.