Read the entire S&P press release here.
Couple of items that jumped off the page:
– The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics.
Could threats from the credit ratings agencies, Moody's, Fitch and S&P, be the reason for the hair-on-fire austerity fever? If so, talk about the tail wagging the dog. No for-profit corporation -- and certainly not three of them -- should be threatening the government, especially when the threats involve putting economic growth and employment in jeopardy.
And here are paragraphs four and five. In other words, these are major reasons for the downgrade.
– More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011.
– Since then, we have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us pessimistic about the capacity of Congress and the Administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government’s debt dynamics any time soon.
And so the S&P is frustrated with Republican obstructionism. They don't say it explicitly, but it's obvious. When has the White House, or the Democrats for that matter, ever resisted calls to compromise? Never. The Democrats have twisted themselves into knots trying to compromise, while the Republicans refused any attempt to meet them halfway because Mitch McConnell and others have made it perfectly clear that their goal is to obstruct and flummox the president. Nothing more, nothing less.
The Republicans get 95 percent of the blame for this, but don't expect the cable news and Sunday show doofs to give you this analysis. Count on more of the "both sides" meme and try not to let your head explode.