Media Whistling Past The Graveyard

Just because the media is tiptoeing around mentioning this doesn't mean I have to. From S&P's explanation of the U.S. debt downgrade:

Compared with previous projections, our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act.

And this:

When comparing the U.S. to sovereigns with ‘AAA’ long-term ratings that we view as relevant peers–Canada, France, Germany, and the U.K.– we also observe, based on our base case scenarios for each, that the trajectory of the U.S.’s net public debt is diverging from the others. Including the U.S., we estimate that these five sovereigns will have net general government debt to GDP ratios this year ranging from 34% (Canada) to 80% (the U.K.), with the U.S. debt burden at 74%. By 2015, we project that their net public debt to GDP ratios will range between 0% (lowest, Canada) and 83% (highest, France), with the U.S. debt burden at 79%. However, in contrast with the U.S., we project that the net public debt burdens of these other sovereigns will begin to decline, either before or by 2015.

Given S&P's complicity in the 2008 meltdown, lots of folks online are downplaying S&P's action and questioning the firm's credibility. No one seems to have noticed that S&P expects those ‘AAA’ "socialist" countries with their "big government" health care programs to perform better than the U.S. in the near term.

(Cross-posted from Scrutiny Hooligans.)