Even though Congress is likely to pass a bill to raise the nation’s debt limit and avert default, the U.S. still faces the very real possibility that credit rating agencies will downgrade our debt for the first time in history. S&P and Moody’s both indicated that the framework offered by John Boehner (R-OH) would be inadequate to prevent a downgrade from our current AAA rating. A downgrade will likely cost $100 billion a year, wiping out Congress’ deficit reduction efforts and making it more costly for consumers to borrow money. Both Republicans and Democrats have decried the possibility of downgrade as seriously damaging to the U.S. economy.
Yet Fox News’ vice president of business news Neil Cavuto recently said during an interview with John Stossel that he “would welcome a downgrade” because it would serve as a wake-up call to the American people:
CAVUTO: I would welcome a downgrade. I really would. I think it would be the pain from which we have a gain.
STOSSEL: Maybe that would wake people up.
Stossel had said earlier in the interview that a downgrade would not be good for the economy. Yahoo News notes that the markets are seriously spooked about the global ramifications of a downgrade and many on Wall Street “have moved into gold, silver and other commodities, or are building short dollar positions in the case of an eventual downgrade.”
S&P has been the most hard line about cuts, insisting on $4 trillion in cuts to keep the country’s AAA rating intact. Under that yardstick, the current deal will fail to preserve the U.S.’s rating. While the major credit rating agencies have rightly faced criticism for exploiting the debt crisis to push their own agenda, it’s disturbing that Cavuto is rooting for an event that would be so costly and damaging to his own country’s economy.