Opinion

Triple-A nation

There’s no small irony in the fact that the proceeds from yesterday’s Wall Street selloff — precipitated by Standard & Poor’s weekend downgrade of America’s credit rating — largely ended up invested in US Treasury notes.

That is, S&P may no longer rate the nation AAA — but the market clearly does.

So President Obama was correct about one thing during televised remarks yesterday: The downgrade was at best premature — and at worst unnecessarily destructive.

Alas, he was right about little else, continuing to deflect blame to Capitol Hill Republicans and insisting once again that America needs higher taxes.

The downgrade certainly won’t help stabilize the economy — witness yesterday’s 634-point stock-market cratering.

And yesterday’s S&P downgrade of Fannie Mae and Freddie Mac — which own or guarantee half of all US mortgages — will doubtless lead to even higher interest rates. That, in turn, will fuel higher prices across the board — which will only make the overall economy that much worse.

Yet there really isn’t much doubt that Washington can cover its debts — as yesterday’s rush to Treasuries demonstrated. And it’s significant that Moody’s yesterday reiterated its own AAA rating, saying that Washington “can support higher debt levels than other governments.”

Clearly, the S&P downgrade was meant to send a message — or perhaps to deflect attention from the agency’s top-notch ratings for the mortgage-backed securities that tanked in 2008, sparking the current economic downturn.

But the president and his allies are wrong when they decry “the Tea Party downgrade.”

Certainly the “Tea Party” — whatever that even means in this debate — had nothing to do with the fact that Washington’s formal debt now exceeds the nation’s GDP. Or, taken another way, America has more on its Mastercard than it earns in a year. A day of reckoning of some sort was merely a matter of time.

What the Tea Party and other Republicans were demanding — for the first time ever — was an immediate reduction in federal spending, coupled with a longterm commitment to entitlement reform, as a condition of lifting the national debt limit.

They got something less, but it was the beginning of a necessary, inevitably rancorous, national debate.

And S&P’s subsequent irresponsibility shouldn’t be allowed to obscure that.