A very interesting line in S&P’s full report (.pdf) wherein it downgraded the sovereign debt of the US from AAA to AA+.
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.
First, it’s interesting (and correct) that that the GOP is rigidly anti-revenue, and would resist any measure that would raise revenue.
That being said, as S&P itself notes, the tax cuts are due to expire, meaning no measure is needed to get rid of them. They’ll just go away.
Still, you have to wonder if Obama will end up agreeing to some kind of deal whereby the tax cuts stay in exchange for, say, a payroll tax cut or an unemployment insurance extension.
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