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No. of Recommendations: 3
What the S&P has to say about US debt is only of relevance to the traders who will trade on it. No one takes the rating agencies seriously for actual evaluation of credit-worthiness. They do have an impact on funds and institutional investors that have rules related to ratings, but no one with any real interest in the bond market would rely on them.

As I recently pointed out, my community has a AAA bond rating, which is because some wise-guy sits in his office crunching data he gets fed (from the reports apparently including using optimistic spin) and completely oblivious to the intent of officials to invest in a project 100% guaranteed to bankrupt the city (with only a few wet-blanket citizens standing in the way).

We don't need the S&P to understand the US deficit and the need to bring it under control, although there is debate as to how quickly given the fragile economy. We know the Republican push to cut domestic programs they hate anyway is irrelevant to cutting the deficit. We know it will be impossible to cut the deficit sufficiently without reversing tax cuts (which includes to middle class folks like me), which will need to include eliminating the special rate for capital gains and dividends, which is where the wealthy get much of their income (as Warren B. emphasizes). We know that the so-called social security deficit is just an attempt to kill SS by those who have always hated it and who don't want to pay back the trust fund on schedule, because that would force tax increases on the rich. The trust fund more or less worked for its purpose of SS cash flow through the boomer retirement, and the post-boomer retirement actuarial adjustment is trivial, unless you fraudulently project it to infinity. I would love to say that the deficit could be solved by eliminating wasteful military spending and actions, but that alone won't do it, although there is a lot of wasteful spending on the military (and on so-called homeland security. We even know how to cut health care costs: professional health care economists actually have viable models. But it won't be by giving yet more power to insurance companies to ration health care, and the single largest savings would come from "death panels," i.e., actually encouraging people to engage in end-of-life planning, because when forced to think about their own mortality rationally, most people opt for death-with-dignity, which also happens to save a lot of money.
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