Here’s a quiz. What do Bulgaria, the Republic of Iceland, Worldcom, Enron, Venezuela, AIG, Eastern Air Lines and Greece all have in common? The answer? The credit rating agency Standard & Poor’s has, at some time, issued a negative outlook on the debt of each of these entities.
Yesterday, Standard & Poor’s issued a negative outlook on the sovereign debt of the United States. Thus the U.S. joins an ignominious pantheon of bankrupt companies and failed socialist states.
The timing is interesting. It follows a speech by Obama last Wednesday that was startling to many because of the disconnect between the president’s words and the country’s deteriorating fiscal health. Rather than actually confront the problem, Obama reverted to type and again blamed the Bush tax cuts on “the rich.”
Apparently no one has told him that rolling back the Bush tax cuts on those making over $250,000 raises only $80 billion against a deficit of over $1.6 trillion; a mere five percent.
Standard & Poor’s has been criticized for being slow. Their negative outlook on Enron, for example, wasn’t issued until Enron was essentially dead. You have to hope that they’re not similarly behind the curve with respect to the United States.