UPDATED with Peter Schiff’s take at bottom (video).
Barack Obama is indeed “historical”.
In two and a half short years, the ‘smartest man to ever be president’ has “transformed” America from a AAA nation to a AA, with a “negative outlook” to boot.
The Democrat apparatchiks in the state-run media will try to blame the Tea Party for this, but it has been the Tea Party who has been predicting this inevitability since the movement began.
Furthermore, it is the Tea Party people who have been the only ones who have put any serious plans for dealing with the debt crisis on the table. They have offered the ‘Ryan Plan,’ ‘Cut, Cap, and Balance,’ and the ‘Mack Penny Plan‘.
The Democrats have offered only the Obama-Reid-Pelosi-Lenin-Alinsky-Cloward and Piven ‘Implode America Plan’.
The United States’ credit rating was cut for the first time when Standard and Poor’s lowered it from triple-A to AA+, citing the country’s looming deficit burden and weak policy-making process.
Standard and Poor’s on Friday revised the nation’s rating downwards to a AA+ with a negative outlook, despite a push back from the White House, which said the rating agency’s analysis of the US economy was deeply flawed.
It was the first time the US was downgraded since it first received a triple-A rating from Moody’s in 1917; it has held the S&P rating since 1941.
S&P further warned:
The outlook on the long-term rating is negative. We could lower the long-term rating to ‘AA’ within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case.
So, S&P must be a bunch of evil Republican-donating hacks, right? Nope. The top dogs contribute almost exclusively to the Democrat party.
Hotair.com has posted loads of updates on the story. Here are some of them:
Update: A grumpy White House points to S&P’s math error and calls it “amateur hour.”
Update: Zero Hedge has the text of S&P’s statement. The debt-ceiling deal wasn’t good enough:
Update: Is this an economic mega-quake or a slight tremor? There’s no way to know since we’ve never been here before, says WaPo’s Dyan Matthews, but here are the arguments for both scenarios.
Update: The GOP was planning to push their message for a balanced-budget amendment during the August recess. The downgrade will help that effort, but I wonder after this whether we’ll have an August recess after all. Is Congress really going to sit back for another four weeks while the economy tries to cope with this news?
Update: Fannie Mae and Freddie Mac will probably be downgraded too. So much for any near-term housing market recovery.
Update: The Treasury Department is indignant: “A judgment flawed by a $2-trillion error speaks for itself.”
Update:Warren Buffett, whose own company was downgraded by S&P, thinks it’s a big nothingburger:
Buffett to my colleague Liz Claman: Did the US deserve this? “Buffett: “NO.” Are you worried about the markets Monday? “NO.”
“This president has destroyed the credit rating of the United States through failed economic policies and his inability to control government spending… President Obama is destroying the foundation’s of our economy one beam at a time. I call on the president to seek the immediate resignation of Treasury Secretary Tim Geithner and to submit a plan with his list of cuts to balance the budget this year, turn the economy around and put our people back to work.”
REPORT: China says here comes QE3!
Bloomberg (h/t Weasel Zippers) — The U.S. Federal Reserve will extend its program to purchase the nation’s debts and stabilize long- term interest rates after Standard & Poor’s downgraded its credit rating, according to an adviser to China’s central bank.
The Fed will roll out quantitative easing 3, a tactic to purchase treasuries, Li Daokui, an adviser to the People’s Bank of China, wrote in his microblog weibo.com. Institutional investors will be forced to sell long-term U.S. debt, which may cause financial turbulence, he wrote.
S&P lowered the U.S. rating one level to AA+ from AAA for the first time yesterday while keeping the outlook at “negative,” citing the nation’s political process and criticizing lawmakers for failing to cut spending enough to reduce record budget deficits. The rating may be cut to AA within two years if spending reductions are lower than agreed to, said the New York-based rating firm.
The U.S. must address its “structural debt problems” and ensure the safety of China’s dollar assets, the state-run Xinhua News Agency said in a commentary today. China is the biggest holder of U.S. debts.
Here’s Peter Schiff’s take on the news.