News broke tonight that S&P has downgraded the United States’ credit rating from AAA to AA+. The effect of this downgrade on interest rates and consumer borrowing will play out in the coming days, weeks, and months. There is a startling degree of uncertainty over the inevitability of this downgrade and its actual results for the U.S. economy. Speculation on this front is best left to others. What is of note and interest to me is the role and force of the rhetoric in the debt dealing debate in causing this downgrade. First, some background on what I mean by the force and materiality of rhetoric.
The contention that rhetoric has materiality, that is to say that rhetoric in and of itself can act with force in the world is a contentious claim in the discipline. While I do not wish to stride into that debate here, I wish to acknowledge the position taken by Ronald Walter Greene that rhetoric cannot remain mired in the politics of representation, critics must take heed of the ways rhetoric exercises force in the world. This move from meaning to force as the telos of rhetoric also appears in recent work by Kevin Michael DeLuca. All of this is important because they posit the role of rhetorical criticism as one that takes account of the force rhetoric has in the world. Meaning, rhetoric has the ability to affect bodies and culture. To paraphrase Raymond Williams, rhetoric, bodies, and culture come into solution with one another at one and the same time. This leaves open the possibility that rhetoric is consequential for its own sake in the world.
This is critical when reading the S&P’s downgrade of U.S. credit. S&P places three factors at the forefront of their decision. 1) The ideological commitments of GOP politicians with regard to spending, revenue, and market functions. 2) Inaction on the part of Congress to deal with the debt ceiling seriously and their willingness to use the debt ceiling as a political tactic. 3) The rhetoric that surrounded the debt ceiling debate itself. Lets look at this third factor:
More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011. (WSJ)
Another rationale they provide is:
Since then, we have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us pessimistic about the capacity of Congress and the Administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government’s debt dynamics any time soon. (WSJ)
In part there is a real divide between the GOP and Democratic parties. Those divides are ideological, but they have played out in the heated rhetoric that saw policymakers settle on a policy that slashes spending but does very little to seriously address the debt (that task lies either with a proposal from the newly formed Super Congress or a devastating cut that would be triggered automatically). In its wake, the vitriol of the debate, the intransigence of some in the GOP who were openly willing let the U.S. default, and the unwillingness by many to even consider increased revenues have lead the S&P to view American democracy as a destabilizing force in the capitalist desires of the global economy. That is hardly the capitalist narrative tied to the rhetorics of American exceptionalism we have been taught.
In an immediate response, liberal economist Paul Krugman has argued that the numbers do not add up to justify the downgrade. Thus, if the math is fuzzy we can accept two conclusions: 1) S&P has erred in their judgement. Their math is wrong and the move is meaningless given the longterm strength of the U.S. market. Or, 2) The numbers do not matter because the quest for ideological purity over healthy fiscal policy has led to rhetorics that are exerting material force as they weaken America’s standing in the global arena and leave a trail of political, personal, and cultural consequences–consequences that come as much from the rhetoric about legislation as it does from legislation that has been passed. This suggests the quality and nature of the debate, regardless of its true meaning or what it really represents about the health of Congress, have force in the world.
That force today comes with great uncertainty for how the markets will react to S&P’s own rhetorical maneuvers as it justifies a downgrade in the United States’ credit rating.
Slate seems to concur with parts of my analysis. Check out their take here.