Standard & Poor’s lowered its outlook for the nation’s long-term debt Monday, based on the uncertain political debate around the nation’s fiscal problems.
The outlook means that there is a one-in-three likelihood that it could lower the long-term rating on the United States within two years, S&P said.
Larry Kotlikoff’s 6-1/2 years of breathing space referenced last week seems optimistic now, doesn’t it?
Here’s Treasury’s reax in the CNN item:
“We believe S&P’s negative outlook underestimates the ability of America’s leaders to come together to address the difficult fiscal challenges facing the nation,” said Mary Miller, the Treasury’s assistant secretary for financial markets.
Miller argued that dealing with the current fiscal challenges is “well within our capacity as a country.” She noted that Obama has called on Congress to begin developing a deficit plan next month, with the aim of reaching a legislative framework by June.
We have done nothing in the past two-plus years to demonstrate the existence of that capacity.
Washington types keep telling me that Americans really don’t care about the debt issue. But I think this warning — not to mention an actual loss of the AAA rating — is yet another data point that will sink into our collective head — right along with a trillion-dollar deficit, the EU debt crisis and our financial meltdown which shows too much debt can cause wealth to disappear in a flash.
It’s already sunk in — almost everywhere but Washington.