Tales from the Trail

“Many commonsense Americans like myself  saw this day coming,” Sarah Palin says of the Standard & Poor’s downgrade of the U.S. credit rating and the fallout in the markets.

In what reads like an economic policy statement, the former Alaska governor and possible presidential candidate says she is “surprised that so many people seem surprised by S&P’s decision.”

“Weren’t people paying attention over the last year or so when we were getting warning after warning from various credit rating agencies that this was coming?” she said in a lengthy posting on her Facebook page.

Palin, who is still weighing whether to join the crowded race for the 2012 Republican presidential nomination, says she even sounded some of those warnings herself.

“Back in December 2010, I wrote: ‘If the European debt crisis teaches us anything, it’s that tomorrow always comes. Sooner or later, the markets will expect us to settle the bill for the enormous Obama-Pelosi-Reid spending binge.’ ”

.As market maven Mohamed El-Erian told us today “The medium term has a way of creeping up on you.” That’s why everyone needs a cattle prod from time to time and today it was Washington’s turn to get a goading.

It came in the form of Standard & Poor’s decision to slap a negative outlook on America’s top-notch credit rating because of Washington’s plodding pace on deficit reduction. The White House and Congress need to get in gear and start making meaningful plans to cut the deficit or else be responsible for a dreaded downgrade in debt. The chances? One-in-three over two years.

S&P took most everyone by surprise, although the White House knew on Friday. In three days, it prepared the defenses: 1) S&P is making a “political judgment”; 2) “we shouldn’t overreact”; 3) actually we are closer than you think in agreeing with Republicans about the way forward.