As I said (during the speech) WSJ

S&P, as did many others, said it saw the Obama and Ryan budget proposals "as the starting point of a process," but "That said, we see the path to agreement as challenging because the gap between the parties remains wide." And: "We believe there is a significant risk that Congressional negotiations could result in no agreement." And this stalemate will continue "over the next two years."


S&P is simply connecting the political dots after last week's un-Presidential tirade against the GOP.

S&P's analysis also discussed fiscal conditions, most notably the scale of the deficit problem before and after 2008: "[I]n 2003-2008, the U.S.'s general (total) government deficit fluctuated between 2% and 5% of GDP. Already larger than that of most 'AAA' rated sovereigns, it ballooned to more than 11% in 2009 and has yet to recover." This surely is one Bush comparison that the Obama team wishes to bury.

The S&P outlook also says its baseline scenario for the U.S. economy is "near 3% annual real growth." But "near" 3% growth will not revive tax revenue enough to shrink the growing U.S. debt burden, which is heading toward 80% of GDP.

Notably, there was no call in the S&P note for closing the deficit with tax increases, a staple of ratings-agency fiscal fixes. We hope this neutrality reflects some recognition of the way countries like Greece, pressed to cut spending while raising taxes, descend into an endless downward growth spiral. That's how a nation's outlook becomes truly "negative."

The Obama fiscal policy since 2009 has been to explode the U.S. balance sheet with ever-greater spending financed by monetary reflation—which the President in his speech euphemized as "emergency steps." The result after more than two years is what scares S&P and more than a few Americans: a historically subpar recovery, unprecedented deficits, persistently high unemployment, commodity inflation and now growing anxiety over U.S. creditworthiness.

The Ryan budget has been criticized as heartless and cruel. But its purpose is to address the rising U.S. debt problem without tanking the U.S. economy, and to do so before a truly heartless and cruel credit downgrade of the sort S&P gave Japan in January. Mr. Obama's response was simply to mock the GOP proposal.

The ratings agencies are hardly the last word on U.S. economic health. But the S&P outlook is a warning to the White House that financial markets have noticed that this President seems to have decided that his path to re-election lies in demonizing his opponents rather than seeing to the nation's fiscal well-being.