A Credit Downgrade

Even if Congress avoids a technical default on the nation's financial obligations — and both Republicans and Democrats vow they will not allow that to happen — the nation's financial underpinnings may be shaken. That's because a downgrade of U.S. credit is looking more and more likely.

The major ratings agencies all have warned of such a possibility. Standard and Poor's has indicated that without deficit reduction on the order of $4 trillion over a decade, a downgrade was possible. That's why we've argued that congressional Republicans should have been more willing to take the deal President Barack Obama was offering that came close to that magic number. The two plans now on the table aren't in the ballpark.

A downgrade would mean higher interest rates.

And that could cost the country jobs at a time when the economy remains sluggish.

The moderate think tank Third Way compared interest rates paid by countries with AA ratings vs. countries with AAA ratings (including the United States). The conclusion: Countries with the lower rating pay, on average, about 0.75 percent more to bondholders.

It's hard to predict what would happen, but if that math holds true, taxpayers might be paying up to $100 billion more a year in interest. That would trim national output and employment. Third Way estimates that a 0.5 percent increase in the cost of money would claim 640,000 U.S. jobs.

Is it worth watching another 600,000 to 700,000 people lose their jobs just so members of Congress can score political points? Only those members can answer that question.

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