In the wake of the U.S. debt downgrade, the markets have been volatile, but the political fallout has been less clear so far. With Congress on its August recess, party leaders are lying low while they gather their rank-and-file and make plans for what's next.
When Standard & Poor's downgraded the country's credit rating, it was clear about why: Its statement said it "reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges."
President Obama put it this way: The government lost its AAA status "not so much because they doubt our ability to pay our debt if we make good decisions, but because after witnessing a month of wrangling over raising the debt ceiling, they doubted our political system's ability to act."
The very first reaction this got from members of Congress? More partisan wrangling.
"I believe this is, without question, the Tea Party downgrade," Democratic Sen. John Kerry told NBC's Meet the Press. "This is the Tea Party downgrade because a minority of people in the House of Representatives countered even the will of many Republicans in the United States Senate."
Florida Republican Rep. Allen West retorted on Fox News: "I find those comments to be absolutely the most insidious thing I've ever heard."
He said Democrats "have to look at themselves and they have to understand that they are the ones that are totally to blame."
Some Weren't Shocked
Doesn't sound like a whole lot has changed, does it?
But there are lawmakers who are thinking a little differently after the downgrade. Many weren't shocked by it, for one thing.
"Honestly, I wasn't very surprised because we were told that if the final deal wasn't large enough or convincing enough that we should expect a downgrade," said freshman Republican Andy Harris of Maryland.
Harris was one of the Republicans who voted against his party's final deal — because, he said, it just wasn't large enough.
Senate Democratic Leader Harry Reid signaled the same thing, even before the downgrade, as he answered reporters' questions in a Senate hallway. "The question is, after we get this done, is there need for comprehensive deficit reduction? The answer is not only yes but hell yes."
Reid and the other leaders in the Senate and House are appointing members of a supercommittee to come up with about $1.5 trillion in deficit reduction.
And that's where many in Washington — and on Wall Street — are pinning their hopes for a brighter fiscal future. Harris, the freshman Republican, says Congress has got to convince the credit rating agencies that it can get a hold of runaway deficits.
"The silver lining to the downgrade is it'll make us face reality in Washington," Harris said.
Extraordinary Legislative Powers
But here's the problem: Many economists, including the ones at S&P who downgraded the country's credit rating, say one of the keys to getting deficits under control would be to raise taxes on wealthier Americans — something most Republicans adamantly oppose.
And it's not just economists, said Andy Kohut, a pollster with the Pew Research Center for the People and the Press — the public wants a so-called balanced approach, too.
"We have found, and every other poll has found, the American public saying, 'Compromise, compromise, compromise,'" he said.
So that lobs the ball directly into Congress' court. In the deal it passed just before the recess, the supercommittee is given extraordinary legislative powers: 12 lawmakers can come up with a plan that goes straight to the House and Senate floors for an up-or-down vote. No procedural trickery, no poison pills.
The supercommittee could just be the place where lawmakers finally compromise.