First of all, here is a link to the actual S&P downgrade report. I would encourage you to read it and arrive at your own conclusions!
After reading the report, here is my interpretation of it. My one sentence summary is that "Congress did not do enough to cut spending or increase revenue to make a real impact on our deficit spending and the overall debt". It specifically mentions that congress did not address spending cuts on the major entitlement programs. The report also mentions that the budgets cuts should not have been deferred to a select committee.
From
the report:
We
lowered our long-term rating on the U.S. because we believe that the
prolonged controversy over raising the statutory debt ceiling and the related
fiscal policy debate indicate that further near-term progress containing the
growth in public spending, especially on entitlements, or on reaching an
agreement on raising revenues is less likely than we previously assumed and
will remain a contentious and fitful process. We also believe that the fiscal
consolidation plan that Congress and the Administration agreed to this week
falls short of the amount that we believe is necessary to stabilize the
general government debt burden by the middle of the decade. (Italics are mine)
prolonged controversy over raising the statutory debt ceiling and the related
fiscal policy debate indicate that further near-term progress containing the
growth in public spending, especially on entitlements, or on reaching an
agreement on raising revenues is less likely than we previously assumed and
will remain a contentious and fitful process. We also believe that the fiscal
consolidation plan that Congress and the Administration agreed to this week
falls short of the amount that we believe is necessary to stabilize the
general government debt burden by the middle of the decade. (Italics are mine)
For any budget, whether it is your household, a major corporation, or a government, if there is a deficit on the bottom line there are two ways to address that. Cut expenses and/or bring in more money. Simple enough and I think everybody understands that.
Cutting expenses- The "guns and butter" debate that I studied in high school will always be there and likely we will never have a complete consensus on what to cut and where to spend. However, anybody who says there is just no room to cut federal spending has their head where the sun don't shine. We all know the government is a huge bureaucracy full of redundancy and waste. If we simply freeze spending and let the economy grow at current rates the budget balances in about 11-13 years. I personally like the "Penny Plan" that has been talked about. Cut 1 penny out of every dollar spent each year for the next 8 years. Nothing dramatic but some belt tightening across the board.
Raise revenue - Here is where some big disagreements occur. A business can raise prices or find a way to sell more of the good or service it provides. The correlation to government would be to increase taxes or expand the economy. In the recent debt discussion revenue increases were the Democratic code words for tax increases. Republicans would more favor giving incentives to people that would expand businesses and have the extra benefit of creating jobs.
But those big corporations don't pay hardly any taxes now! They should pay their fair share!- People need to understand 1 point. When enough people understand this point then we will finally see the economic progress and expansion that we need ..... Corporations(or any business) don't pay taxes, they collect them! What? Taxes are simply a business expense that is passed along in the final cost of the product or service they provide. Oh sure, they might write a check to the IRS, but they get the money from whatever it is they sell. Where does that money come from? Ultimately it comes from you and me.
My opinion- The traditional Republicrats and Demicans came up with a typical compromise piece of crap PR piece of a bill to make look like they were taking serious action when in reality it does very little. The spending cuts proposed over the next 10 years do nothing to address the current spending levels and the responsibility for those cuts was kicked to a committee. Like we need more government committees. Tax rates for business should be frozen or even reduced. Capital gains tax should be lowered. Money that businesses have on foreign soil should be allowed to be brought back to the U.S. tax free. If they keep the money in a foreign country we never get the taxes anyway. It would be free money flowing back in to the economy.
Read the report yourself, think it through, and tell me your opinions and ideas.
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