Has the USA lost its AAA superpower rating?

While the debtopocalypse might have been cancelled, I see that the wake for American hegemony is chugging right along.

The interwebs is drowning from variations of the argument that the process by which the debt ceiling deal was reached has dented American power. To sum them up: Sure, the United States government staved off collapse, but the galactically stupid brinkmanship over it has permanently damaged America’s brand. Furthermore, the new politics of brinkmanship means that we could potentially see this kind of own-goal as a new permanent fixture of American political economy. Continued political uncertainty over something as obviously necessary as raising the debt ceiling means that actual policy problems like, say, crumbling infrastructure, education, or reassessing grand strategy is a true fool’s errand. So, in other words, the USA is screwed.

See the Wall Street Journal, New York Times, David Weigel, David Rothkopf, Felix Salmon, and Joshua Keating for just a small sampling of this compelling argument.

To which I say: mmmmmmmaybe.  

I don’t doubt that the U.S. brand of constitutional democracy has taken a pretty severe hit from this episode. Then again, the parliamentary system of democratic governance has long been more popular, so that’s not really a new thing.

There are three factors, however, that make me wary of this kind of eulogy. First, I’ve come to look at concepts like "soft power" and "standing" with a bit of a jaundiced eye. Even if the U.S. takes a hit in that category, I’m not sure that loss translates anything more tangible than … a bunch of foreign-policy pundits bemoaning its loss.

Seriously, compare the last few years of the Bush administration with the first few years of the Obama administration. Any measurable metric of standing or soft power with the presidential transition. The effect on U.S. foreign policy, however, has been negligible.

Second, power is always a relative term, so the question has to be asked — who’s gaining on the United States? Joshua Keating’s survey of global schadenfreude doesn’t change the fact that the eurozone remains a basket case, Japan and Russia remain demographic disasters, and China has domestic political problems that make partisanship in the United States look like child’s play. Even a cursory glance at military spending reveals no peer competitor to the United States. So yes, the United States will endure a rain of rhetorical horses**t for a while … right up until the next crisis in which the world demands America "do something" because it’s still the only superpower still standing.

Or, to put this in bond rating language — even if US power is downgraded from AAA, who else is even above BBB+?

Third, the thing about democracy is that it has multiple ways to constrain political stupidity and ideological overreach. The first line of defense is that politicians will have an electoral incentive to act in non-crazy ways in order to get re-elected. The second line of defense is that politicians or parties who violate the non-crazy rule fail to get re-elected. So, in some ways, the true test of the American system’s ability to stave off failure will be the 2012 election. Politicians from both parties have vastly overinterpreted recent electoral victories as sweeping mandates. I suspect, in 2012, many of them will be penalized for such hubris. If they aren’t, well, then the conventional wisdom might have a point.

Smart investors made a ton of money this past month by betting on the full faith and credit of the United States despite the D.C. blood sport. If one could make a similar wager on American power, I’d be inclined to bet against the current market sentiment.

Am I missing anything?