Great news about the Standard & Poor upgrades! No, seriously.


While the United States was being knocked down from its AAA ranking, two states-Ohio and Florida-got upgrades from the credit rating agency. Ohio went from AA+ negative to AA+ positive, and Florida received an AAA rating.


In both cases, the states had done something that the United States has been unable to do: cut spending without raising taxes:



Governor John Kasich pushed through a budget that closed a roughly $8 billion deficit without raising taxes. S&P also noted the moderate economic recovery and an unemployment rate that fell to 8.6% in May 2011 from 11% in March 2010 as signs of a better long-term fiscal outlook.



Ditto for Florida, which won a AAA rating after closing a budget hole with what S&P said were “significant cost-cutting measures” and making a commitment to maintaining strong reserves. Governor Rick Scott’s 2012 budget was praised for “significant measures” to address its budget deficit and for being “proactive in reducing expenditures to adjust for revenue shortfalls.”



Such ratings matter to states because they reduce the cost of borrowing and often improve the perception of their business climates….


As the Wall Street Journal goes on to note, these states improved their standing after the end of 2009 federal stimulus payments. States that relied heavily on these payments are more vulnerable than other states because the rating agencies assume that this money will no longer be available.


The governors of both states have taken a hit in the polls:



These newly elected Governors have their share of political bruises for pushing reforms, and both Messrs. Kasich and Scott have suffered in the polls. But the credit upgrades are a sign of better things to come. By making hard decisions early, they have made job-damaging tax increases less likely and put their states in a better position to benefit from the national economic recovery-assuming it continues.


This is leadership. Let’s hope governors who do the right thing will ultimately be upgraded in the polls because of their leadership. Kasich and Scott have been strong and realistic.


Meanwhile, on a national level, we have a president natters on about green jobs when most people just want a job that pays something green to provide food and shelter for the family. Here is another heavily-subsidized green project that could not stay in the black.