Earlier it was reported that the White House got a heads up last Friday that the US debt outlook would be lowered by S&P.It turns out that back and forth pleading went on for weeks before the decision, according to Zachary Goldfarp at The Washington Post (via @stefcat23).
The administration’s line: Yes, we can come together to solve the debt “problem”.
S&P’s line: No, you can’t.
A couple things are interesting here aside from the jostling. The first is that the administration obviously knew that the outlook was under review when Obama made his big deficit speech, so to some extent that speech must’ve been aimed at S&P. But considering the fact that the speech only seemed to divide Washington, it was a real flop.
But more importantly, we wonder if the administration actually thought a lowered outlook would impact borrowing costs. Obviously that point is laughable. The bond market doesn’t care about S&P’s outlook, but it seems the administration thinks S&P had a lot of power.