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Standard & Poor's cut the U.S. credit rating for the first time ever in 2011, citing political bickering that stood in the way of credible action to fix the nation's finances. The two other big credit rating agencies, Moody's and Fitch, have basically said they, too, will cut the U.S. rating if there's no meaningful action on debt reduction this year. While the sequester might harm the economy in the short term, it would actually represent a fairly serious effort to narrow the gap between Washington's spending and revenue. Over nine years it would cut spending by about $1 trillion, which is roughly one third of the total savings budget experts say it will take to put the federal government on solid financial footing. That would probably be enough to forestall additional cuts in the U.S. credit rating, and perhaps even reverse the S&P downgrade. [READ: Why the Government Is Suing Standard & Poor's] It's still not the best way to fix the government's finances. Since it would do nothing to prioritize the most useful federal programs, the sequester could inadvertently cost the government revenue, through tax receipts lost due to a slowdown in economic activity. That would obviously make the debt problem worse. It would be better if politicians could agree on targeted cuts that would be phased in slowly, giving everybody affected time to adjust. Yet even critics of the sequester grudgingly acknowledge it will help with deficit reduction. Budget gurus Alan Simpson and Erskine Bowles, for instance, called the sequester "mindless" in their latest blueprint for government reforms. Yet they also identified the sequester as one of four essential steps that must be taken to get the government back on track, with the other steps including tax and entitlement reform, along with further tax hikes and spending cuts. What few politicians will say is that paying down the nation's debt is likely to be painful, no matter what. Whether it starts with the sequester in 2013, or some other measure a few years later, it won't change the fact the we've got a lot more government right now than we can afford. Somebody has to pay, sometime.
