Felix Salmon nails it:
Secondly, and more importantly, all sovereign defaults are political, not economic — especiallydefaults by countries which borrow exclusively in their own currency. S&P and Moody’s can look at all the econometric ratios they like, but ultimately sovereign ratings are always going to be a judgment as to the amount of political capital that a government is willing and able to spend in the service of its bonded obligations. If Treasury really believes that S&P based its judgment fundamentally on debt ratios and the like, it’s making a basic category error about what it is that sovereign raters actually do.
How many people forget that America can always make the money it needs appear to pay its debts. Willingness to pay is not just part of the picture in assessing a sovereign debt rating for a nation that controls its monetary system, it IS the picture.
So in light of the fact that it was a failure of political will that led to the downgrade, when I see far right commentators (looking at you, Erick Erickson) say:
Most people are missing the fact that raising the debt ceiling is the compromise…
I find it very difficult to say that the majority of culpability doesn’t fall on the Tea Party.
And while the administration’s official line is that S&P is simply wrong, I think the events of the past week will prove too powerful to allow that narrative to prevail. Even if the Omaha’s octogenarian wants to trot out some trope about the US deserving a “AAAA” rating, it’s just absurd. Obama can quote it all he wants — he will just look absurd as well.