S&P Kerfuffle Raises Free Speech Concern
Just when you think the ineptness of Congress and the President has reached its depth, they act in yet more confounding ways. We now see that official Washington intends to open up hearings and conduct formal investigations into the rating agency Standard & Poor’s.
This is obviously a childish retaliation for S&P’s decision to downgrade the U.S. Treasury’s debt rating from AAA to AA+. The politicians now tread on dangerous territory: the First Amendment.
S&P and other rating agencies have long resisted regulation of their businesses on the grounds that what they do and say are matters of freedom of speech under the First Amendment.
However laughable that may have seemed to some, even the staunchest critics must see its poignancy now. S&P attributes its opinion about the U.S. position to political weaknesses that the Congress and the President have displayed. It is difficult to deny that what S&P said and did was an exercise of free speech.
The case simply strengthens when official Washington not merely rebukes the agency but threatens it. At minimum, this complicates the task Congress and the President gave federal agencies last year to rewrite regulations applicable to rating agencies and how their ratings are used.
Thus do Congress and the President make even worse the consequences of their political gamesmanship. As my GW colleague Jeff Manns wrote in today’s NY Times, the rating agencies are a clever crowd engaged in their own kind of game. But official Washington must get over that and somehow gain a modicum of sophistication instead of acting like a bunch of boobs.