Newest Fox News piece: The S&P Downgrade Is a Wake Call for All Americans

My newest piece at Fox News starts this way:

When Standard & Poors downgraded Spain's bonds from AAA to AA+ in January 2009, its interest rates increased from 4.1 to 4.3 percent.
When the same ratings agency downgraded Ireland's from AAA to AA+ in March 2009, their interest rate rose by about 0.4 percentage points.
So what does that mean for Standard & Poors in terms of downgrading the U.S. bond rating?
With our $14.6 trillion in national debt, raising the U.S. government interest rates by the same amounts would eventually add about $29 to $58 billion a year in increased interest costs -- small change when we are already facing a $1.63 trillion deficit this year. And not all of that increase would be immediately felt since we only face the higher interest rate on newly issued bonds.
The problem with these downgrades is that they have a tendency to quickly spiral out of control. . . .

UPDATE: From The Hill newspaper:

Treasury Secretary Tim Geithner said Tuesday there is "no risk" the U.S. will lose its top credit rating amid a new analysis that revised its outlook on American debt to "negative."

Geithner took to the airwaves of financial news networks to push back against a report Monday by Standard & Poor's that lowered its outlook on U.S. debt to "negative," reflecting political uncertainty over whether lawmakers will reach an agreement to address long-term debt.


There is no chance that the U.S. will lose its top credit rating, Geithner said, forcefully disputing the notion that S&P or other ratings services might downgrade U.S. bonds from their current AAA rating.

"No risk of that, no risk," Geithner said on the Fox Business Network. . . .

Obama got what he wanted on the length of the deal to raise the debt ceiling, but we still got the downgrade of the credit rating.



Transcript from Obama's July 25, 2011 address to nation:

First of all, a six-month extension of the debt ceiling might not be enough to avoid a credit downgrade and the higher interest rates that all Americans would have to pay as a result. We know what we have to do to reduce our deficits; there’s no point in putting the economy at risk by kicking the can further down the road. . . .