Our Observation

If your holidays aren’t as bright in a few months as they were last year, thank the political game of chicken that played out in Washington while Congress debated whether it would be OK to ruin America financially this summer.

Think back to the head-on tractor showdown from “Footloose” and you get the picture. The Republicans were driving one tractor, the Democrats the other. But instead of just risking clanging steel, imagine all of the American people standing in the middle.

Sure one side swerved (rather wide) before Congress could wreck and cripple us, but it turns out that one of America’s credit rating agencies thought the idea of toying with America defaulting on its debts, even briefly, was stupid enough.

Standard and Poor’s Ratings Services didn’t like the idea of political intransigence putting the entire country at risk for default, so it levied its own punishment.

But the American people get to feel the effects a lot more than the people who tried to wreck our nation’s economy for the sake of cutting government programs during a recession. A six-figure congressional salary is a lot more capable of cushioning that blow than a shrinking (or non-existent) working man’s paycheck, especially come Christmastime.

And it’s even worse for those who’ve been living off credit cards to stave off ruin. If your credit rating isn’t looking too friendly right now, hey, at least it’s not as bad as America’s. At least that’s how it would seem after the S&P downgrade sent shockwaves across the globe on Aug. 5.

But that’s the funny thing about S&P’s downgrading of America’s debt rating from AAA to AA-plus — it’s still far better than the average American’s. But when the avalanche of cascading affects play out across the country’s financial landscape, it’s those average Americans’ already-bad credit that may suffer the most.

Interest rates are already being projected to rise on consumer credit, which means that those who need credit most — to buy even the simple things in this depressed economy, down to basic needs — will pay more for it in the end, regardless of whether they’ve always paid their bills on time.

And that interest hike won’t just affect consumers. With business credit harder to get than any time in the last 15 years, more and more small business owners are using credit cards to finance the next big expansion or just to stay afloat while the economy very slowly recovers.

So come the holidays, your favorite stores may not be open any more, if you can even afford to shop there. The bottom line will be tougher times ahead for average Americans, thanks to a political game that bet Americans’ quality of life and lost.

Absent some so far unspoken measure to hold off the ripple effect from the credit downgrade, things aren’t looking positive for the near term. But some forecasters are at least trying to paint a clearer picture of how dire the situation could be.

John Ulzheimer from SmartCredit.com told Time magazine last week that interest rates could rise 2 to 3 percent by the holidays. Congress says Merry Christmas.