It’s been described as one of the most telegraphed downgrades in sovereign debt rating history, but did Standard & Poor’s have some sort of ulterior motive when it moved the U.S. debt from AAA to AA+?
Monday on MSNBC, South Carolina Democratic Rep. James Clyburn said as much. The Assistant Democratic House Leader said this was, as even some on the right have acknowledged, more about politics and less about economics.
“Well, let me begin by saying this is very unfortunate,” Clyburn said. “I think it’s undeserved. But I don’t think it was unexpected. I think that those of us who have been watching this, the S&P, Finch, as well as Moody’s, had the feeling that S&P might do something like this. I don’t believe it’s deserved at all.
“I think if you look at their reasoning, it didn’t seem to focus as much on economics as it did on the political activities that were going on in Washington. I don’t know what our political debate has to do with the economic stability or economic ability that the country may have to pay its debts. But they seemed to focus on the debate that was going on in Washington, which I think is so unfortunate.”
That led Clyburn to explain what he really thought was at work, and how the downgrade was justified, with some fuzzy math.
“[I] think a lot has to do with what’s going on in Europe as much as what’s going on in the United States of America,” Clyburn said. “And I think that S&P has begun to play quite a bit in Europe and because it makes them look better in the European markets when they are sort of chiding us here in the United States. It’s a good deal for them. But, you know, we’ll get through this. I don’t think this is as serious as it could be, if the other two rating agencies had downgraded. The fact they did not, and that S&P even admitted to making a $2 trillion error. If you make a $2 trillion error, and you said that we should be — should have done another $1.5 trillion in our overall debt relief program that made us $500 billion to the good. So, if you said we should have done $1.5 trillion more, and you made a $2 trillion error, then what’s the deal here? So, I think that this is unfortunate. As I said, it’s undeserved. And for the reason I just mentioned, not quite unexpected.”