Under current economic circumstances, the deficit is bad, and a downgrade of the credit rating has bad effects. However, stimulation of the economy during a recession is needed more.  If the economy is stimulated through lower taxes, it might cause it to recover faster and move into a boom period earlier. If this is the case, then even if the lower credit rating results in higher repayment costs, the economy returning to growth earlier will mean tax revenue is higher earlier. If that is true then it is possible that the government will recoup the cost of the tax cuts later on with higher growth.  Secondly, the extension of Bush tax cuts for a two year period is unlikely to have any lasting impact on such a large deficit. Whilst the rich have a lot of money, it is entirely within their power to use accountants and other means such as offshore bank accounts to ensure that they do not bear the full brunt of the change. Bush tax cuts caused more rich people to keep their money in the U.S. This meant that despite the lower taxes, the greater amount of money kept in the U.S. meant that overall there was a net profit from the change. [1]  [1] Twerkel, Amanda “Cantor Admits Extending Bush Tax Cuts Would “Dig The Hole Deeper on the Deficit – But He Doesn’t Care.”” Think Progress. 02/08/2010