Super Sad True Debt Story: AAA to AA+
by Heather Regen | Georgetown University
Although I avoid its op-ed page like the plague, I love the Wall Street Journal—the real, “Who left ink marks on the fridge door?”, finger-staining printed version. I turn to it for economic news far more often than book reviews, but its summation of Shteyngart’s Super Sad True Love Story rang true: “Finally, a funny book about the financial crisis.”
Several weeks ago I picked up Super Sad True Love Story hoping to get the same chill from it as I had from 1984 and Brave New World. NPR even proclaimed the novel “more frightening” than Orwell and Huxley’s classic dystopias.
Yet as I finished the book, I failed to grasp the nightmare of it all. I wasn’t unsettled by Shteyngart’s near-future world—a world where FoxLiberty-Ultra streamed news of the U.S. debt getting downgraded to “RED++IMMINENT DANGER.” The hyperbole of it all amused me. It appeared, as the Wall Street Journal put it, just a funny book about the financial crisis—until last week.
While Standard & Poor’s certainly didn’t downgrade the country’s credit rating to RED++IMMINENT DANGER last Friday, the fall from AAA to AA+ proved a psychological blow to the nation. As the New York Times reported, the “deeply embarrassing” downgrade shook both the stock market and the public’s support of Congress.
However, S.& P.’s downgrade itself lacks firm credibility. With Moody’s and Fitch, the two other major ratings agencies, keeping the U.S. at an AAA rating, S.& P. stands alone in its move. Paul Krugman argues that while S.& P. had the chutzpah to “downgrade America,” the agency had no right to do so given its own track record. Setting S.& P.’s $2 trillion dollar error aside, Krugman describes how the agency played “a major role” in the 2008 financial crisis, notoriously keeping Lehman Brothers at an A rating “right up to the month of its demise.”
In fact, reading S.& P.’s statement reveals that the agency downgraded U.S. credit mostly due to the “debacle” of the debt-ceiling standoff and political deadlock. Projections of economic recovery—or lack thereof—are delineated, but S.& P.’s most striking language lies in its deriding of “political brinkmanship.” The agency stated:
…the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges…
We have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us pessimistic about the capacity of Congress and the Administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government’s debt dynamics any time soon.
As Joe Nocera noted in an NPR interview, S.& P. “is actually making a political judgment. The U.S. has the ability to pay its debts …but no appetite for raising revenue.” Or as Krugman phrases it, “what makes America look unreliable isn’t budget math, it’s politics.”
The political climate that brought about the debt debate brinkmanship has built up for some time. Leading Republicans and members of the radical Tea Party caucus have pushed major decisions—including threatening government shutdown in April—to the last minute, injecting policy debate with threats where there should instead be true debate and compromise.
As David Wessel writes, “The issue is the inability of the political system to change course. The credit rating isn’t the problem. The problem is the problem.” And yet Congress is moving no closer to a solution.
Addressing the political gridlock, President Obama noted the same dilemma. “It’s not a lack of plans or policies that is the problem here,” he argued. “It’s a lack of political will in Washington. It’s the insistence on drawing lines in the sand, a refusal to put what’s best for the country ahead of self-interest or party of ideology. And that’s what we need to change.”
The ongoing political bickering and brinkmanship is weakening the financial health and reputation of the United States. Congress would be grossly irresponsible to continue on this way. Though it once seemed just a disheartening recession-era comedy, Super Sad True Love Story now appears to paint the picture of a true American dystopia. “The Congress is just for show,” Shteyngart writes, “‘Look, we still have a Congress!’”Heather Regen is a NextGen Journal Editor and a student at Georgetown University's School of Foreign Service, Class of 2014.