S&P doesn’t like any of the debt plans out there
Here’s the thing: S&P seems to want Washington to cut much faster than any of the plans currently circulating. As Goldman Sachs notes:
Most scenarios would take the U.S. further into risk of a downgrade using the rating agencies’ stated criteria (for instance, Moody’s has in the past indicated that the edge of its “reversibility band” for a downgrade from AAA is an interest to revenue ratio of 14%; the definition and coverage of the measures in the chart may differ somewhat but the implication is similar). … Most official forecasts show greater deterioration of these measures. Interestingly, the highest profile reform proposals, from the co-chairs of the President’s Fiscal Commission, Sen. Alan Simpson (R-WY) and Erskine Bowles (D) and, separately, from Rep. Paul Ryan (R-WI) would result in a much more benign path for the debt/GDP ratio, but would still allow the interest to revenue ratio to increase to levels that the rating agencies would likely view as problematic.