This will be absolutely devastating. Even though we know these draconian cuts will not heal the economy but will actually make things worse (all you have to do is look at the results from similar measures in the UK and Europe), you have to wonder about our so-called leaders and their fervent faith in the same economic voodoo that has never worked to date.
Because with the same cast of characters, I think we can assume the same kind of outcome. At most, I expect the closing of some small tax loopholes that will count as "revenue" -- and the rest will be taken out of the hides of the most vulnerable.
Moral of the tale: When a corrupt rating agency says, "Gee, I notice you haven't cut your safety net programs for the elderly and poor all that much," the craven politicians respond, "How much would you like me to cut, sir?"
WASHINGTON — The downgrade of the United States government’s credit rating by Standard & Poor’s is almost sure to increase pressure on a new Congressional “supercommittee” to mute ideological disagreements and recommend a package of deficit-reduction measures far exceeding its original goal of at least $1.5 trillion, lawmakers said Sunday.
Even before the panel is appointed, its mission is expanding. Its role is not just to cut the annual budget deficit and slow the explosive growth of federal debt but also to appease the markets and help restore the United States’ top credit rating of AAA. Otherwise, taxpayers may eventually have to pay more in interest for every dollar borrowed by the Treasury.
The report certainly got the attention of Capitol Hill. “I think this is one of the most telling, important moments in our country’s history right now,” Senator John Kerry, Democrat of Massachusetts, said Sunday on the NBC program “Meet the Press.” He added: “This poses a set of choices not just about a recession. It’s about a financial crisis and the structure of our economy, which really has been misallocating capital.”
In the S.&P. report on Friday outlining the reasons for removing long-term Treasury debt from its list of nearly risk-free investments, the company cited doubts about the ability of the two political parties to bridge their gulf on fiscal policy.
Credit rating agencies have thus emerged as a powerful constituency whose concerns are taken seriously by Congress.
[...] S.&P. did not advocate a specific mix of increased revenue and spending cuts. But it did say that overhauling entitlement programs was “key to long-term fiscal sustainability” and that the debt deal “envisions only minor policy changes on Medicare.”
Oh, if only we had real leaders in our political establishment. And if pigs had wings, they could fly.