Okay, I’ll Ask

by Andrew C. McCarthy

Question for our economic gurus from the resident conspiracy theorist (or, at least, former prosecutor who doesn’t believe in coincidences). What is the chance that the timing of S&P’s foreshadowing of a downgrading of the U.S. triple-A rating is intended to prejudice the outcome of the debate on raising the debt limit? That is, is someone trying to put Democrats in a position to argue, “See, even the mere suggestion that our credit rating might be downgraded roiled the markets. How can you possibly suggest that we don’t raise the debt ceiling? It’s the only way to assure the market and our creditors that the U.S. will always honor its debts.”

Mind you, I do not believe raising the debt ceiling is the only way to make those assurances. I personally think not raising the debt ceiling, and arranging our payments to ensure that our creditors get paid in full while we reduce other spending, would be the best way to show we understand the importance of being financially responsible, which in turn would ease the anxiety of the market. But I am just wondering whether today’s S&P news is something that would have happened today irrespective of the debt ceiling controversy or whether we are seeing an effort to shape the outcome of that controversy.