Montana’s U.S. delegation responded with a series of predictable prepared statements following Standard & Poor’s decision to downgrade the credit rating of long-term U.S. debt. Glaringly missing from those responses were the politicians’ opinions of a ratings agency whose own approval rating deserves to be as bad as that of Congress.
That’s not to say this country should maintain its AAA rating, which still means something to some people, such as investors, bankers and mortgage lenders (just look at the skittish stock market). Perhaps the clownish standoff over raising the debt ceiling was justification to give us the dreaded AA+ grade. And counting on this so-called “super committee” to come up with a plan by Nov. 23 to cut $1.5 trillion from the budget over the next decade that both the Senate and House will agree upon is a giant leap of faith.
Sen. Max Baucus was named to the committee, which will include six Democrats and six Republicans. This group will be asked to do something Congress apparently isn’t “super” enough to do on its own. Thus, the credit downgrade which raised the profile of S&P, which is a shame.
S&P, like most other credit rating agencies, failed miserably in the run-up to the economic meltdown of 2008 when it proved its grades are mostly meaningless. It was that agency, and the likes of Moody’s and Fitch that completely missed or ignored the pending housing bubble and continued to award AAA ratings to repackaged subprime mortgage-backed securities. We all know how well that ended.
Yet our delegation’s reaction to the S&P downgrade was mild sniping and vague overtures.
Democratic Sen. Jon Tester blamed much of it on the House of Representatives.
“The dysfunction back there – and its consequences – are driven by an incredibly irresponsible agenda in the House where instead of real and responsible spending cuts, some are casting ‘protest votes’ and pushing to cut Medicare in order to protect tax loopholes for the wealthy.”
Republican Rep. Denny Rehberg, who is running for Tester’s seat, used it as an opportunity to push for a balanced budget amendment and criticize the spending culture of the capitol.
“The downgrade of America’s credit is a direct result of the failed policies of the big spenders in Washington, D.C.,” he said.
Baucus said it is time for “tightening the belt” and to close loopholes, something that probably should have been done before the country teetered on the brink of default.
Washington’s “dysfunction” once again got in the way of a solution and Montana’s U.S. delegation (no matter how hard they claim to stand on higher ground) is still part of a Congress that has a 10-percent approval rating: its lowest ever, according to a recent Fox News poll.
Instead, the S&P downgrade was an excuse for politicians to stand on their respective soapboxes and deflect blame for a crisis that rests as much on their shoulders as it does on the credit agencies.
As the Washington Post reported earlier this month, S&P has spent $11 million over the last decade on lobbying, paying to influence government officials to pass policies favorable to their business, often limiting federal oversight. It then gets to hold onto its powerful role influencing financial markets, despite its failings.
A more appropriate response to the downgrade than those offered by our delegation in Washington would be to explain that S&P is part of the reason we’re in this economic rut. We failed to hold the agency accountable. And our dysfunction since then has only made it worse. Perhaps then they would begin to gain a little credibility.