After rounding up some initial reax to the S&P downgrade, Dan Drezner insists that our political system is not broken:
S&P has failed to observe the political aftereffects of the debt deal. As I argued previously:
[T]he thing about democracy is that it has multiple ways to constrain political stupidity and ideological overreach. The first line of defense is that politicians will have an electoral incentive to act in non-crazy ways in order to get re-elected. The second line of defense is that politicians or parties who violate the non-crazy rule fail to get re-elected. So, in some ways, the true test of the American system's ability to stave off failure will be the 2012 election.
The first line line of defense has been breached, but the second line of defense looks increasingly robust. Public opinion poll after public opinion poll in the wake of the debt deal show the same thing — everyone in Washington is unpopular, but Congress is really unpopular and GOP members of Congress are ridiculously unpopular. At a minimum, S&P needs to calculate how the current members of Congress will react to rising anti-incumbent sentiment. If they did that analysis and concluded that nothing would be done, I'd understand their thinking more. I didn't see anything like that kind of political analysis in their statement, however.
Michael Cohen holds a very different view from across the Pond:
[W]hatever one may think of Standard & Poor's recent downgrade of US debt, the ratings agency view that "the effectiveness, stability, and predictability of American policy-making and political institutions have weakened" seems almost self-evident. […]
America is increasingly moving toward a parliamentary system in which politicians, rather than voting along regional lines or in pursuit of parochial interests, cast their ballot solely based on whether there is a D or R next to their name. Such a system might work well in the UK, but in the US, with its institutional focus on checks and balances and the many tools available for stopping legislation, a parliamentary-style system is a recipe for inaction.
(Photo: A trader works on the floor of the New York Stock Exchange during afternoon trading on August 8, 2011 in New York City. The Dow finished down more than 600 points after Standard and Poor's downgraded the U.S. credit rating. By Mario Tama/Getty Images)