Standard & Poor’s dubious credibility notwithstanding, there’s no great mystery as to how we arrived at last night’s downgrade announcement.

Ordinarily, a downgrade has a fairly specific meaning: it refers to an institution that may struggle to pay its bills. No one seriously doubts whether the United States, the single wealthiest country on the planet by a large margin, will have the financial resources available to pay its bills, but the question under consideration is whether our political system will undermine our ability to be responsible.

And that’s really what the S&P announcement boils down to. This was a condemnation of American politics, not American finances. One would like to think the ratings agency used some kind of economic/fiscal/monetary measurements, applying a rigorous a test to draw an objective conclusion. In reality, however, Standard & Poor’s “is just making stuff up.”

For the conservatives celebrating this morning — I vaguely recall a time those rooting against the United States saw their patriotism called into question — it might be worthwhile to take a close look at the Standard & Poor’s report. Judd Legum highlighted some of the key takeaways from the S&P analysis:

The political brinksmanship of recent months highlights what we see as America’s governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy. […] It appears that for now, new revenues have dropped down on the menu of policy options. […] The act contains no measures to raise taxes or otherwise enhance revenues, though the committee could recommend them. […] Compared with previous projections, our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act.

It’s only fair to note that the same analysis pressed Democrats on the need to consider entitlement changes, but in reality, Democrats did put entitlements on the negotiating table, only to discover that Republicans would refuse to compromise.

The downgrade, in other words, was the direct result of Republicans playing a hopelessly insane game with the full faith and credit of the United States, and then refusing to consider even a penny of tax increases on anyone at any time. Worse, GOP leaders have spent the week boasting of their intention to do all of this again, for as long into the future as they can.

Americans elected lunatics to help run Congress; they launched a reckless scheme; and now they appear to have sabotaged our fiscal credibility and standing.

The 2010 midterms are proving to be one of the most dramatic national mistakes in generations.