Tens of thousands of congressional staffers, government employees and K-street lobbyists begin their first work-day after Standard and Poor’s downgraded the United States Friday, but elected officials — including the one occupying the White House— are nowhere to be found.Politicians of both parties are escaping the DC heat and humidity for the month-long August recess, while President Barack Obama is scaling back his public event schedule as his campaign continues fundraising activities.
The S&P action has done little to change the political reality in the near term — that Congress is taking a vacation while leaving half-a-dozen jobs bills and the federal budget incomplete. And for the next month, there will be no response from Washington other than the blame game.
Neither party is quite sure how the public is reacting to news of the downgrade, with Republicans criticising Democrats, and Democrats criticising S&P.
For Obama the downgrade is a massive liability, as he is the most visible member of a government now deemed to be at some risk of not meeting its obligations. Republicans are on the hook for their opposition to tax reforms, cited by S&P as a key factor in the decision to strip the U.S. of its ‘AAA’ rating.
Looking ahead, the downgrade puts new pressures on the “Super Committee,” created less than a week ago to cut $1.5 trillion from the deficit, to exceed its goal by as much as $2 trillion to meet the S&P’s target.
Hopes for the bipartisan group dimmed last week, as Republicans and Democrats waged a public battle over the need for revenue-raising reforms and whether to include entitlement spending as part of the discussions.
S&P said it doubts that a serious attempt at either will succeed. Ratings officials even threatened a second downgrade if the committee failed to meet its statutory requirements, despite the triggered cuts that would take effect.
House and Senate leaders have until August 16 to select members for the “Super Committee,” a decision that will likely determine from the start if the group can reach an agreement.
Democrats have pledged not to appoint anyone “locked-in” to any one position, while Republican lawmakers have stated they are unwilling to appoint any member who would accept tax increases.
There is plenty of room to compromise over tax subsidies and corporate loopholes, as full-scale tax reform will be attempted separately, according to Democratic sources.
Whether the S&P decision will provide the political impetus to bridge the growing partisan divide on Capitol Hill remains to be seen, but failure will likely mean another downgrade.
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