Negative outlook

This week, we look at media reaction to the decision by ratings agency Standard & Poor’s to give the US a negative credit outlook. Editorial commentators say that this move by S&P should be seen as a warning to American political leaders.

Warning shot

It’s time for both Democrats and Republicans to compromise if the world markets are not to lose all confidence in the US economy, writes the Financial Times.

… Nobody who pays the slightest attention to Washington needs the S&P update to tell them that US politicians cannot agree on how to put the public finances on a sound footing. Many other governments are under strain from the recession and future spending demands linked to demography. But the US problem is made worse by a combination of inherited fiscal recklessness and profound division on party lines leading to paralysis. …

Calling Obama

The Wall Street Journal also sees S&P’s action as a warning — but the newspaper says the warning is directed at President Obama, not at the opposition Republicans.

… Notably, there was no call in the S&P note for closing the deficit with tax increases, a staple of ratings-agency fiscal fixes. We hope this neutrality reflects some recognition of the way countries like Greece, pressed to cut spending while raising taxes, descend into an endless downward growth spiral. That’s how a nation’s outlook becomes truly “negative.” …