S&P to Obama: Do what Osborne is doing

Tim Montgomerie

Leading ratings agency Standard and Poor's downgraded the USA today, awarding a "negative outlook" to the world's most important economy. My colleague Ryan Streeter at ConservativeHomeUSA thinks it strengthens Republican demands for a tougher line on spending.

For those of us focused on UK politics this is the key paragraph in the S&P report:

"While thus far U.S. policymakers have been unable to agree on a fiscal consolidation strategy, the U.S.'s closest 'AAA' rated peers have already begun implementing theirs. The U.K., for example, suffered a recession almost twice as severe as that in the U.S. (U.K. GDP declined 4.9% in real terms in 2009, while the U.S.'s dropped 2.6%). In addition, the U.K.'s net general government indebtedness has risen in tandem with that of the U.S. since 2007. In June 2010, the U.K. began to implement a fiscal consolidation plan that we believe credibly sets the country's general government deficit on a medium-term downward path, retreating below 5% of GDP by 2013."

In other words, the USA needs to do what Britain is doing. And soon.