So, am I wrong about this, or didn’t Moody’s and S&P; start whining about downgrading us until after the Republicans started making threats about not passing the debt ceiling increase unless there were massive cuts?
I mean, the deficit didn’t just suddenly get bigger a month or two ago and nobody expected it. When did Moody’s and S&P; first suggest they might downgrade us? Because if they haven’t been talking about downgrading us from the moment the stimulus passed, then I smell collusion with the GOP. Otherwise why didn’t we hear about this it was perfectly timed to help the GOP cut the budget to hell?
And as an aside, please tell me that S&P; didn’t just downgrade us, which in and of itself may end up cutting growth (especially if mortgages get more expensive), at the same time they helped pressure the President and Congress to cut spending which will further cut growth, all of which will cut government revenues (because tax revenue goes down when people make less money and/or are out of work), which will exacerbate the deficit and thus cause S&P; (and Moody’s) to demand even more cuts lest they downgrade us even further, which could cut growth even further, etc. (Krugman talks about a similar spiral.)
The only thing more idiotic is that the President and the Dems in Congress seem to be willing participants in the economic death spiral.
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