Credit Rating Agency Says Budget Is Fine. So What Could Go Wrong?

You want another reason to worry about the state budget? Well, here's one: a major credit rating agency isn't worried.

Standard & Poor's, the credit rating agency that precipitated the economic and housing crisis by giving top ratings to mortage-backed securities, declared Thursday that the budget has been stabilized.

Now things are fine, according to S&P, despite the billions of dollars in legally questionable manuevers and rosy assumptions in the budget.

What a relief.

The S&P report raises the question of why anyone believes the credit rating agencies anymore.

S&P along with other agencies previously had been so hysterically negative about the state's finances that it gave California the nation's lowest credit rating, even lower that ratings given to any number of corporations that have since failed.

And predictably, S&P's positive report on the budget was followed Friday by a negative national jobs report.

With taxes tied to employment and the national economic picture, such a report would seem to raise doubts about the $4 billion in additional revenue that was assumed as part of last week's budget deal.

But not to worry. S&P isn't worried. So what could go wrong?

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