Should America's AAA credit rating be restored?
President Obama insists the U.S. still has sterling credit, even if S&P rates us just AA+. Either way, the road back to AAA won't be an easy one
On Monday, President Obama responded to the unprecedented Standard & Poor's downgrade of America's sovereign credit rating to AA+, arguing that "no matter what a ratings agency says, we will always be a AAA country." The U.S. needs to tackle its ballooning deficits, but that's a problem that is "eminently solvable," Obama said. Despite the downgrade, investors still seem to view U.S. Treasuries as the safest investment around, and the other two major ratings agencies — Fitch and Moody's — are keeping the U.S. at AAA for now. Meanwhile, S&P continues to defend its much-maligned analysis underpinning the downgrade. Does the U.S. deserve to have its AAA rating restored?
Forget S&P. America is still AAA: "S&P may no longer rate the nation AAA — but the market clearly does," says the New York Post in an editorial. Who are you going to believe: Investors, who are flocking to U.S. securities, or the ratings geniuses who helped tank the global economy by propping up mortgage-backed securities? Obama is right that "the downgrade was at best premature — and at worst unnecessarily destructive."
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
Actually, our politicians earned this downgrade: S&P deserves all the grief it's getting for its flubbed economic analysis and generally "horrific track record of risk analysis," says Annie Lowrey at Slate. But it downgraded the U.S. because of political risks, not economic dangers, and "that call seems to be completely correct." As the excruciating "debtpocalypse" debacle proved with months of bitter, ineffective negotiations in Washington, "we might be able to pay our debts, but it is far from clear that we will always be willing to pay them."
"S&P is right. It's Congress' fault"
Regaining AAA status is in our hands: "S&P probably will do nothing to the country's new AA+ rating" until after the 2012 election, says Douglas McIntyre at 24/7 Wall Street. The ratings agency and "the majority of economists" agree that we need to get our fiscal house in order by tackling soaring entitlement costs and raising taxes. Unless voters usher in politicians willing to commit to those hard sacrifices, we deserve S&P's rebuke. In other words, "America's situation is not hopeless unless Americans make it so."
"How the U.S. can get its triple-A rating back"
Create an account with the same email registered to your subscription to unlock access.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
-
'Make legal immigration a more plausible option'
Instant Opinion Opinion, comment and editorials of the day
By Harold Maass, The Week US Published
-
LA-to-Las Vegas high-speed rail line breaks ground
Speed Read The railway will be ready as soon as 2028
By Peter Weber, The Week US Published
-
Israel's military intelligence chief resigns
Speed Read Maj. Gen. Aharon Haliva is the first leader to quit for failing to prevent the Hamas attack in October
By Justin Klawans, The Week US Published
-
Arizona court reinstates 1864 abortion ban
Speed Read The law makes all abortions illegal in the state except to save the mother's life
By Rafi Schwartz, The Week US Published
-
Trump, billions richer, is selling Bibles
Speed Read The former president is hawking a $60 "God Bless the USA Bible"
By Peter Weber, The Week US Published
-
The debate about Biden's age and mental fitness
In Depth Some critics argue Biden is too old to run again. Does the argument have merit?
By Grayson Quay Published
-
How would a second Trump presidency affect Britain?
Today's Big Question Re-election of Republican frontrunner could threaten UK security, warns former head of secret service
By Harriet Marsden, The Week UK Published
-
'Rwanda plan is less a deterrent and more a bluff'
Instant Opinion Opinion, comment and editorials of the day
By The Week UK Published
-
Henry Kissinger dies aged 100: a complicated legacy?
Talking Point Top US diplomat and Nobel Peace Prize winner remembered as both foreign policy genius and war criminal
By Harriet Marsden, The Week UK Last updated
-
Trump’s rhetoric: a shift to 'straight-up Nazi talk'
Why everyone's talking about Would-be president's sinister language is backed by an incendiary policy agenda, say commentators
By The Week UK Published
-
More covfefe: is the world ready for a second Donald Trump presidency?
Today's Big Question Republican's re-election would be a 'nightmare' scenario for Europe, Ukraine and the West
By Sorcha Bradley, The Week UK Published