Re: Another First
Paul who.. 
Actually a fair criticism.. of that earlier very bad call, but perhaps in the years since they have got religion and become a little more diligent about ratings. At this point and looking at this situation, this appears more like casting aspersion on the bearer of the bad news, than a fair inspection of the news. In defense of the rating agency they said "do this, or we do that". We didn't do "this", so they did "that". Congress called their bluff and they weren't bluffing.
While this only means we are slightly more ugly in the eyes of one rating agency it doesn't change much in the relative scheme of things. Other major countries have lost their AAA rating before and regained it, but this is not about them, or even about the rating. it's about us doing what is responsible.
The Chinese have at least two (or three) motives for their comments, The obvious one is the value of all the US debt they already own. If we devalue the dollar even more, they lose value in their holdings.
The equally obvious reason #2 is they are trying to gain influence by expanding their military presence outside their "great" wall. Any decrease in our military presence is an automatic increase for them (Putin was taking cheap shots too, but this is expected). I don't play close attention to Chinese adventurism, but at the moment I think there's an open dispute with Viet Nam about some oil or gas in the So. China sea, and the recent withholding of rare earth metals from japan was over another incident related to disputed sea/land territory. Taiwan is currently trying to purchase some military aircraft from us and China does not look favorably upon this (they still claim Taiwan as theirs).
A third motive for the Chinese is the desire for a new world reserve currency, other than the dollar, something like a basket of multiple national currencies (including the yuan obviously). I think we are more than a little arrogant about the persistence of the dollar's reserve status, and we could lose that if we don't clean up our act.
The bottom line is not how many 'A's are in our debt quality rating, but how many people and nations want to own our debt. This is not a given and we could screw that up.
I appreciate that some feel Langston's posted reduction of this to a proforma family budget was somehow partisan. The partisan difference of opinion is whether to raise taxes or reduce spending. Perhaps to some this seems like six of one half dozen another. Just like family units have limited ability to arbitrarily raise their income, for governments there are practical limits in how much revenue can be raised by simply increasing taxes. Many states governments have already learned that wealthy people can easily move to another state. I will concede that there is a somewhat higher pain threshold to get people and businesses to move to another country, but that doesn't mean it isn't already happening.
JR
