Update: "Even More Commentary on S&P's U.S. Credit Rating Warning".
I figure we have 1000 days. Of course I am using completely arbitrary endpoints on the timeline.*
From Real Time Economics:
Economists and others weigh in on S&P’s decision to put the U.S. sovereign rating on a negative outlook.Benzinga (April 8):
– The sentiment “no big deal” seems correct to me. I am worried about the particulars of the solution to the long-run debt problem — who will end up paying most of the cost of closing the budget gap — but one way or the other the political process will deal with this problem. Also, it’s important to remember that the US debt is a promise to pay dollars, and we can print as many dollars as we want. That could be inflationary, and the inflation can undermine the real value of those bond payments and cause other problems, but that is not technically a default. –Mark Thoma, University of Oregon
–This announcement was not about the debt ceiling; in fact, the debt ceiling is not even mentioned in the S&P release. In sharp contrast, the reason why US government ratings came under pressure in 1995-96 (Moody’s put parts of US government debt on negative watch) was the debt ceiling impasse at that point. This means that even if the debt ceiling debate were to be resolved in the near term, it would not be enough to restore the outlook to stable… The key to a stable outlook is that there be a concrete plan for deficit reduction that needs not only to be agreed upon, but also put in place by 2013. As noted earlier, this will be very challenging. –Barclays Capital Research
......He concluded by saying, "I rather fear these political forces will push it into a recession. In my opinion, the country could actually absorb some more debt in order to get the economy going"...