A failure to follow through

Standards & Poor finally begins to consider downgrading U.S. debt, but lack the guts to point out the obvious.

Standard & Poor’s on Monday downgraded the outlook for the United States to negative, saying it believes there’s a risk U.S. policymakers may not reach agreement on how to address the country’s long-term fiscal pressures.

“Because the U.S. has, relative to its ‘AAA’ peers, what we consider to be very large budget deficits and rising government indebtedness and the path to addressing these is not clear to us, we have revised our outlook on the long-term rating to negative from stable,” the agency said in a statement.

Of course, remember that debt rating services don’t downgrade debt until it is completely obvious to everyone. If you still think U.S. debt merits AAA status, well, you probably borrowed a lot of money to invest in real estate sometime after 2007. To say that the outlook is “negative” is a serious understatement.