Council of Foreign Relations Associate Staff Writer Christopher Alessi interviews Michael Spence:
How, if at all, has the United States’ role in the world shifted following this month’s S&P downgrade?
Our reputation was damaged, mainly by allowing the integrity of our sovereign debt to be in question. The S&P downgrade reflected that, though I think it was premature. The political gridlock over fiscal stabilization and growth is also damaging our reputation externally; the downgrade also reflected that.
U.S. treasuries continue to remain the safest bet forglobal investors. Can that be maintained?
Yes, but not if we cannot find a way to progress to a credible–meaning with bipartisan support–five to seven year plan for the restoration of fiscal stability. [That] means reduced deficits, growth to get the debt-to-GDP ratio down to safe levels–50 to 60 percent–and plans to eliminate, reduce, or fund future liabilities, which are rising.