Here’s DQ’s take:
I admit ignorance here, as I haven’t read the official explanation by S & P. I’m not sure I’d believe it anyway.
One theory I heard was that S & P was happy as a clam as long as everyone understood that the debt ceiling was a completely meaningless number that would automatically be raised whenever needed. But once somebody in Washington suggested the number should be given meaning, that we should actually try to stick to it, S & P panicked at such a bizarre notion and downgraded the U.S. Under that theory, those who had brought up the bizarre notion, the Tea Party wing of the Republicans, of course, could be safely blamed. Remember, the Republicans are always to blame.
The problem with this theory is the timing. If that was really the reason for the downgrade it would have happened months ago, when it became clear the Tea Party members of the House were serious. Or at least weeks ago, when it became clear their seriousness might lead to actual problems. It certainly would not have happend now — after the deal was struck and the debt ceiling safely raised.
My theory is that S & P is upset that the Tea Party was not more successful. I’ve heard that S & P said they were concerned that taxes weren’t being raised. But that is not the real concern. The real concern is that not enough is being done to rein in the exploding deficit. It shouldn’t (and, I suspect, doesn’t) really matter to S & P whether this is done with spending cuts or tax increases. But, it needs to be done. S & P is right about that. And the Democrats’ (and also most Republicans’) refusal to actually consider systemic cuts, as opposed to fantasy cuts like the imaginary trillion out of the defense budget from not fighting wars we weren’t planning on fighting anyway, is every bit as much to blame as any refusal to raise taxes. Why give Washington more money if all Washington is going to do is continue to spend it and more?
Here’s Sadie’s take on a related, though not identical topic: