They downgraded us because we can't set a budget. The Senate refuses to pass a budget. Those are the people you should be targeting. Congress has passed a ton a budgets since it has gotten out of the hands of the Dems. I know...Pelozi couldn't pass a budget because it might hurt the Dems during the 2010 elections. Ooops.
S&P downgraded the U.S. on August 5, 2011 (and rightly in my opinion). Fitch has had the U.S. on negative outlook, but has not downgraded the U.S., yet. How the U.S. handles its "fiscal cliff" issues (2001 and 2003 tax provisions + fiscal commitments agreed in August 2011 to raise the debt ceiling) will determine its next move.
In general, when trying to assess the U.S. credit rating, one must look at all the elements involved:
1. Fiscal: Structural imbalances go back to myriad Tax Code changes and entitlement programs. Costs of dealing with the financial crisis and ensuing recession have also contributed, as have the costs of three conflicts (a component of which will continue even when the conflicts are over e.g., health-related expenses for injured Vets, etc.). No credible medium-term fiscal consolidation strategy (emphasis on medium-term is important) has been enacted. Even the Simpson-Bowles package that would have made a reasonable downpayment toward a larger medium-term fiscal consolidation strategy was not adopted.
2. Political Risk: The process worked badly during the debt ceiling negotiations, narrowly averting a self-inflicted crisis, and resulting in an inadequate fiscal consolidation solution. Now, even as the solution was inadequate, some political leaders are trying to role back the cuts e.g., the sequester involved, without offering concrete and realistic alternatives. The sequester is suboptimal, as it will have a national security impact, but I believe that approach is better than one that involves mainly gimmicks or no solution at all. Indeed, S&P has warned that if those modest cuts do not take place, it could downgrade the U.S. to 'AA' from its current 'AA+' rating.
3. Macroeconomic Risk: The long-term growth rate is likely less than the 3% real annualized figure still assumed by S&P. S&P has not yet accepted that condition, but it would likely lead to an additional downgrade if it were to do so. The long-term growth rate is a combination of the nation's debt overhang (broad domestic nonfinancial debt, led by households and the federal government), structural factors (domestic and international), and public policy. All of those factors interact and the boundaries can be quite ambiguous e.g., public investment choices made in the past can, to some degree, impact structural factors such as workforce quality today.
Specifically, S&P's rationale for the downgrade was:
The political brinksmanship of recent months highlights what we see as America's governance and policymaking becoming less stable, less effective, and less predicatable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy. Despite this year's wide-ranging debate, in our view, the differences between political parties have proven to be extraordinarily difficult to bridge, and, as we see it, the resulting agreement fell well short of the comprehensive fiscal consolidation program that some proponents had envisaged until quite recently...
Our opinion is that elected officials remain wary of tackling the structural issues required to effectively address the rising U.S. public debt burden in a manner consistent with a 'AAA' rating and with 'AAA' rated soverieng peers...