I was reading Seydlitz's post below, thinking about what Standard and Poor's said about legislative dysfunction and realized that this Summer, the United States had ceased to be a permanent sovereign entity, and had become just another flash in the pan. All at the hands of the extreme wing of the Republican Party, prodded on by the Tea Party.
For the purpose of domestic political ends, the Right stated, very clearly, that there is no continuity in the Government of the United States. Not only did they threaten to disavow the legally made obligations of previous Sessions of Congress to the American People, but they threatened to welsh out on debts to the entire world. Not because the government is unable to meet it's current debts, but because they wanted to force the government to default on our debts in punishment for not accepting their programs of social engineering. In short, the world has been told that there is a major element in our elected government that sees the "full faith and credit" United States as only from one session of Congress to the next. There is no longer "history", just immediate gratification.
For more than 222 years, Since Rhode Island ratified the Constitution, the Government of the United States has enjoyed continuity in meeting its financial obligations. Indeed, following the Civil War, the 14th Amendment included a provision stating that any and all legally established debts of the US Government ARE NOT TO BE QUESTIONED. Those who wrote the amendment were ensuring that the debt assumed in the conduct of the Civil War would not be disavowed by a subsequent Congress, either through a change on "political winds" or procedural shenanigans (i.e. filibuster and other house rules). In short, the US was and would be an honorable borrower. Back then, of course, they were basically thinking about a political attempt to avoid honoring specific debts. I am willing to bet there was no notion that a general, voluntary default to achieve political aims would ever be considered.
So, S&P, along with the rest of the world that has invested in US debt instruments, now realize that the US has the potential, and in some quarters the desire, to be a deadbeat. Not because the money isn't there, but because the Far Right has no sense of ethics, honor, obligation or duty in regard to the legal debt of previous Congresses. Persons like John Boehner can disavow the debt he supported in the Bush Tax Cuts and Iraq War at will in order to gain political clout, and expect the world at large to carry the burden.
In short, S&P is telling us the obvious. The United States of America is no longer a continuing entity. It is simply the expression of the current power brokers, with no regard for the lawful decisions of the previous power brokers, nor the next. As with so many nations ruled by petty dictators, we now exist in two year intervals. No investment in the US is legitimate for greater than two years, regardless of the nation's ability to technically honor those debts. Rather, your investment will be subject to the whims and fancy of successive governments.
How S&P had the patience to only lower us one notch is beyond me. It's not a matter of whether our debt is sustainable. It's a matter of a proud proclamation that existing debt simply and voluntarily may not be honored at all, regardless of the ability to do so.
We have become an economic rogue nation. S&P was just being polite in how they described it.