Credit ratings agency Standand & Poor's Monday placed a negative outlook on the future of America's AAA debt rating as a result of looming budget deficits as far as the eye can see.
Later in the day, syndicated columnist Charles Krauthammer of Fox News's "Special Report" said this move by S&P was actually a negative review of President Obama's deficit reduction speech last Wednesday (video follows with transcript and commentary):
CHARLES KRAUTHAMMER: I don't think what S&P issued was a plea. I think what it issued was a review, and it was a review of the President's speech. This is not about whether there’ll be an agreement on the debt ceiling as the White House would like to pretend. What we heard from S&P is this is about will there be real deficit reduction agreed to by the President and the Republicans. It has to be agreed between them, because one controls the White House and the other controls the House of Representatives, and their answer is "No." And this credit rating is not in jeopardy today. It is an outlook, but what it means is there is a one in three chance it is saying today that within two years it’s going to have to downgrade American AAA rating, which would be a shock to the system unlike any we’ve ever had.
BRET BAIER, HOST: Right. Outside of the debt ceiling vote or anything pending in coming days.
KRAUTHAMMER: Right, the debt ceiling vote is not what this S&P forecast is about. It's about what are the prospects of getting control of the debt itself. And the answer is “Little.” And the reason is the Wednesday speech, the beginning of a campaign kickoff. That is why the President is out in the country now. That was not a speech about reducing the deficit. The numbers the President offered were suspended in air untethered to anything. That was a kick in the teeth at Republicans with incidentally the House leadership and Ryan sitting in front of him. It was not an invitation to any negotiation. It was a way of saying, “You walked into my trap, I'm going to now attack you from now until Election Day.”
Krauthammer is likely quite right.
There was nothing economic that happened last week other than the President's speech to precipitate this action by S&P. If the agency had been disappointed by the 2011 budget agreement reached by Republicans and the White House on April 8, this negative outlook would have been issued last Monday.
Instead, the ratings agency likely waited to see how the President was going to respond to Congressman Paul Ryan's (R-Wisc.) 2012 budget proposal, and clearly wasn't pleased with what it saw.
This is now two credible deficit reduction plans this White House has chosen to ignore with the first being offered in December by the President's own debt commission.
As much as the Left and their media minions want to claim this is about raising taxes and/or the upcoming debt ceiling vote, all the credit rating agencies are fully aware that you can take every penny of income away from the so-called rich, and it won't balance the budget. Readers are advised to review Monday articles by CNS News and the Wall Street Journal on that very subject.
As for the debt ceiling vote, since the deadline is still weeks away, there was no reason for S&P to go "negative" now when those discussions are just beginning.
Instead, America's credit rating agencies are looking to see evidence that Washington is serious about cutting spending, and as far as S&P is concerned, what they got from the President Wednesday didn't assure them this is at all the case.