The Obama administration moved swiftly to downplay ratings agency Standard & Poor's downgrade of its U.S. credit outlook, calling the decision a political judgment that should not be taken too seriously.The truth hurts, I suppose. Let's stipulate a few things at the outset, since this our current financial travails are subject to all manner of tu quoque argument.
- What we face has been a long time coming
- We've been kicking the can down the road for a long time
- Most of what we've tried to do in recent years (TARP, stimulus, etc.) hasn't worked very well and much of it has made the situation worse
- While it can be fun to question the motives of those who passed these programs, it's not especially useful when we are trying to move forward, because
- You can blame both sides of the political aisle for the problem and be correct
One last thing -- S&P really doesn't have an incentive to be political. In fact, as a ratings agency if they are overtly political in their judgments, they will lose credibility. They have strong reason to be as neutral as possible.