Putting aside (again) the legitimacy of the ratings agencies, this will be a major problem if it does actually happen. The last time this happened, public opinion had not yet been rallying around the OWS movement. People were frustrated, but certainly not nearly as focused on the unfairness of the 1% over the 99%. The public is paying a lot more attention and less interested in accepting the same old, same old from the political class.
If the next round of deficit cutting proposals fails to include a fair system of pain to go around - as opposed to the current model of pain hitting the 99% - then we could see a lot more pressure to change heading into the 2012 elections. The old model no longer works and has to change.
"The credit rating agencies have strongly suggested that further rating cuts are likely if Congress does not come up with a credible long-run plan" to cut the deficit, Merrill's North American economist, Ethan Harris, wrote in the report.
"Hence, we expect at least one credit downgrade in late November or early December when the super committee crashes," he added.
The bipartisan congressional committee formed to address the deficit -- known as the "super committee" -- needs to break an impasse between Republicans and Democrats in order to reach a deal to reduce the U.S. deficit by at least $1.2 trillion by November 23.
