Who Is Standard & Poor’s To Dictate America On Debt Terms?

July 28, 2011 2:56 am

Robert Reich has some solid points on the debt ceiling debate:

“But Standard & Poor’s has gone a step further: It’s warned it might lower the nation’s credit rating even if Democrats and Republicans make a deal to raise the debt ceiling. Standard & Poor’s insists any deal must also contain a credible, bipartisan plan to reduce the nation’s long-term budget deficit by $4 trillion — something neither Harry Reid’s nor John Boehner’s plans do.

If Standard & Poor’s downgrades America’s debt, the other two big credit-raters are likely to follow. The result: You’ll be paying higher interest on your variable-rate mortgage, your auto loan, your credit card loans, and every other penny you borrow. And many of the securities you own that you consider especially safe – Treasury bills and other highly-rated bonds – will be worth less.

In other words, Standard & Poor’s is threatening that if the ten-year budget deficit isn’t cut by $4 trillion in a credible and bipartisan way, you’ll pay more – even if the debt ceiling is lifted next week.”

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