What Was Standard and Poor’s Expecting to Happen?
This is from Page 3 of the official statement from Standard and Poor’s on their downgrade of the US credit rating…
Despite this year’s wide-ranging debate, in our view, the differences between political parties have proven to be extraordinarily difficult to bridge, and, as we see it, the resulting agreement fell well short of the comprehensive fiscal consolidation program that some proponents had envisaged until quite recently.I suppose you could say that the Republicans had the Ryan plan and the Democrats had the “Cicilline plan” (borrow today and let somebody else worry about it tomorrow), but the Ryan plan never got close to passing in its original form and the “Cicilline plan” is hardly comprehensive. Ultimately, any change away from business as usual brought about by the debt-ceiling and budget deal will be a result of, not in spite of, the Tea Party standing their ground during the sometimes contentious legislative process.
Over the past several years, I’ve heard the opinion offered in multiple discussions that we will know that the government has become serious about fiscal reform when it creates the kind of commission used to decide on military base closings to develop a plan. The distinctive feature of the base-closing process is that the work of the commission must be approved or rejected in its entirety; this week’s budget-deal was a full step in that direction, with its creation of the “super-committee” to create an unamendable deficit reduction program (along with an enforcement mechanism of automatic budget cuts in many Federal departments if the committee fails to act, or if a balanced budget is not passed by both Houses of Congress).
Obviously, the base-commission structure wasn’t any factor in the Standard and Poor’s analysis. So what exactly is in the “comprehensive fiscal consolidation program” that the S&P analysts thought Congress fell short of?