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Originally Posted by Cowboy89
No, S&P made it very clear in their press releases that a $4 Trillion funding gap over 10 years needed to be closed to maintain their AAA rating. Meaning that all forms of proposed bills from the Democrats were offside of this too. Even if the same deal was struck mid-July there would be a downgrade none the less.
If you want to pin something on the tea party I would blame some of the market turmoil right now on Republican brinksmanship, but necessarily the downgrade.
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S&P said that the failure of elected officials to address the funding gap is the big reason for the downgrade. That's a shot across the no taxes bow. Everyone knows that the big entitlement programs have essentially been cut to the bone now. The only remaining option is taxes and as a result they are making a political statement on the downgrade. The markets were relatively sanguine with the debt ceiling debacle knowing that taxes could always be raised. What S&P did was cast doubt on the ease of that policy option.
It's clear to me that this is a function of the extremism in Congress on the right. Markets will be fine however though. No shortage of people wanted to invest in U.S. debt.