First, Moody’s . . .

by Pejman Yousefzadeh on July 15, 2011

Now, Standard & Poor’s:

Standard & Poor’s said late Thursday that it could downgrade the U.S. credit rating as soon as this month, and there is a 50 percent chance it will do so within three months, if Washington fails to come to an agreement over the nation’s debt.

In a statement, S&P indicated a “substantial likelihood” of downgrading the U.S. credit rating, citing a stalemate in Washington over raising the federal limit on borrowing.

S&P managing director John Chambers said in an interview that the downgrade could come by the end of the month if Congress has not voted to raise the $14.3 trillion debt ceiling.

“The positions of the administration and the Republican leadership are still very far apart,” Chambers said. “The tone of the debate has made us wonder whether a compromise can be achieved.”

I continue to think that at the end of the day, there will be a resolution to the current standoff over the debt ceiling. But the leadership class is certainly doing its best to convince us otherwise, now isn’t it?

The very bad McConnell plan is getting more support, as Washington gropes for a way to resolve the crisis. I suppose it is inevitable that the plan will look better as Congress and the White House fumbles about trying to find a way out of the impasse, but I like Megan McArdle’s plan better as a last ditch option, even though, like her, I would have preferred “a broader deal that raised some new revenue and cut a lot of spending.”

  • Johndoe

    McConnell’s plan is impermanent (it only applies to the next three debt-limit increases) and it forces Obama to take all the heat for wildly unpopular decisions (i.e., raising the limit and not cutting [because we know he's physiologically averse to cutting anything]) that can’t but prove damaging to an already shaky reelection. It’s hardly perfect, but the politics are sound and it’s clear that it’s one of the least bad options.

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