Republicans are now openly flirting with the theory that allowing the United States to default briefly on its payment obligations won't be such a bad thing -- and may even be necessary to extract concessions on entitlement spending in exchange for raising the debt limit.
But two of the biggest ratings agencies say they could downgrade the United States' triple-A credit if the government misses even a single debt-service payment.
"A sovereign's failure to service its debt as payments come due is a default according to S&P's sovereign rating criteria," writes John Piecuch, spokesman for Standard & Poors, one of the "Big Three" credit ratings agencies, in an email to me. "In that case, the rating would be lowered to "SD" (Selective Default)."
A U.S. analyst for Moody's -- another Big Three ratings agency -- was not available for an interview. But a spokesman referred me to a February report in which they downplay the likelihood that they'll have to reduce the country's credit rating. But it could happen as the result of a major political failure.
And let's get this straight, folks: once we lose AAA, we'll never, ever get it back. But that's fine with Republicans, who seem to now be suggesting that our only choices are a selective default that harms 90% of America, or trillions in spending cuts that will harm 90% of America.
Nice guys, those Republicans. Again, given the last three decades, what financial and economic credibility do they have?
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