From S&P’s statement today:
Standard & Poor’s Ratings Services said today that it affirmed its ‘AAA’ long-term and ‘A-1+’ short-term sovereign credit ratings on the U.S. Standard & Poor’s also said that it revised its outlook on the long-term rating of the U.S. sovereign to negative from stable.
Our ratings on the U.S. rest on its high-income, highly diversified, and flexible economy. It is backed by a strong track record of prudent and credible monetary policy, evidenced to us by its ability to support growth while containing inflationary pressures. The ratings also reflect our view of the unique advantages stemming from the dollar’s preeminent place among world currencies.
“Although we believe these strengths currently outweigh what we consider to be the U.S.’s meaningful economic and fiscal risks and large external debtor position, we now believe that they might not fully offset the credit risks over the next two years at the ‘AAA’ level,” said Standard & Poor’s credit analyst Nikola G. Swann.
“More than two years after the beginning of the recent crisis, U.S. policymakers have still not agreed on how to reverse recent fiscal deterioration or address longer-term fiscal pressures,” Mr. Swann added.
In 2003-2008, the U.S.’s general (total) government deficit fluctuated between 2% and 5% of GDP. Already noticeably larger than that of most ‘AAA’ rated sovereigns, it ballooned to more than 11% in 2009 and has yet to recover.
Meanwhile, the Wall Street Journal reaffirms what we have been saying here for days: we can’t tax our way out of this financial crisis:
Consider the Internal Revenue Service’s income tax statistics for 2008, the latest year for which data are available. The top 1% of taxpayers—those with salaries, dividends and capital gains roughly above about $380,000—paid 38% of taxes. But assume that tax policy confiscated all the taxable income of all the “millionaires and billionaires” Mr. Obama singled out. That yields merely about $938 billion, which is sand on the beach amid the $4 trillion White House budget, a $1.65 trillion deficit, and spending at 25% as a share of the economy, a post-World War II record.
Get it? You could take 100% of what millionaires make and it still wouldn’t come close to solving the problem.
Does Obama get it? Here he is yesterday:
Now, if you look at the House Republican budget that they’ve proposed, you would have to cut education by 25 percent; you’d have to cut transportation spending by 30 percent. It does make Medicare into a voucher program. That fundamentally changes our society. It’s not compelled by the numbers; it’s compelled by their insistence that people like myself, millionaires and billionaires across the country, shouldn’t pay anything more in taxes, shouldn’t go back to the rates that existed back in the 1990s, when wealthy people were doing well — and, in fact, they want to give more tax breaks to those folks.
If we go back to the rates in the 1990s, you hack, it won’t pay for a fraction of what you want to continue to do.