S&P’s ratings of nations has been suspect at best. Minimally, they’re not very forward looking; we probably should have been downgraded during the Bush years when the policy was “Spend, Spend, Spend while cutting taxes!”. S&P was late on downgrading Ireland, Greece, Iceland… they just don’t have a good track record for being predictive as opposed to just being reactive.
Of course, predicting what congress is going to do is a huge crapshoot, so one has to have some sympathy for anyone trying to model the future. Veteran Piggs will recall just how hard it was to predict the how and when of the housing bubble collapse, only because the government kept randomly trying to prop the market up through various measures.
