This post originally appeared at NationalMemo.com.
When Standard & Poor’s downgraded America’s credit rating from AAA to AA+ after 2011’s debt limit crisis, President Obama was apoplectic.
“Our problems are eminently solvable, and we know what we have to do to solve them. With respect to debt, our problem is not confidence in our credit,” he said. “The markets continue to reaffirm our credit as among the world’s safest. Our challenge is the need to tackle our deficits over the long term.”
Since then, America has made incredible progress in tackling its short-term deficit but the issues that caused the initial downgrade have only gotten worse. The problem has never been America’s finances, but rather the emergence of radical politicians willing to gamble with America’s full faith and credit, as S&P noted in a statement this week that reaffirmed their 2011 ruling.
“The current impasse over the continuing resolution and the debt ceiling creates an atmosphere of uncertainty that could affect confidence, investment, and hiring in the U.S.,” the S&P research team explained.
“This sort of political brinksmanship is the dominant reason the rating is no longer ‘AAA,’” they added. But the agency also noted that it wasn’t considering another downgrade.
Within hours of S&P’s new guidance, Tea Party congressman Rep. Steve King (R-IA) said that he didn’t believe it was even possible for the United States to default on its debt. He called such talk “false demagoguery,” which was his major at Glenn Beck University.
Not raising the debt limit would be a crisis “if we’re lucky, a historic calamity if we’re not,” says The Atlantic’s Matthew O’Brien. Even threatening to do it hurts the economy.
Former Obama speechwriter Jon Favreau wrote in The Daily Beast about the speech he was preparing for the president to give in the case of an actual default in 2011. He described the scenario America faced at the time like this:
Without enough cash on hand, the government would be forced to delay indefinitely Social Security checks, the ones our grandparents depend on to put food in their mouths and a roof over their heads. Veterans who served this country would stop receiving the benefits they earned, and the men and women in uniform risking their lives for us wouldn’t get paychecks.
Every company in America that does business with the federal government, of which there are hundreds of thousands, would not see their contracts paid on schedule, an effect that would ripple down to their employees and their families. With each passing day, making our debt payments to businesses and governments around the world would become more and more difficult. When the world stopped seeing the United States as a safe and reliable place to invest, the cost of borrowing money would skyrocket for every single American—whether it’s a home mortgage or a personal credit card. And those high borrowing costs, coupled with billions in delayed income for seniors, soldiers, small-business owners, and their employees, almost surely would send our economy and the world’s into a crisis even deeper and more dramatic than the Great Recession of 2009.