News / Economy

    Rating Agency Downgrades US Credit Outlook

    Rating Agency Downgrades US Credit Outlook
    Rating Agency Downgrades US Credit Outlook

    Standard and Poor's Ratings Services announced Monday that the United States continues to have a AAA [Triple-A] credit rating, but the rating agency lowered its long-term credit outlook for the U.S. government. S&P cited U.S. budget deficits and government indebtedness as causes for concern.

    According to Standard and Poor's, the United States is among 19 sovereign nations that hold a AAA credit rating, signifying that the country is among the most credit-worthy nations.
    But S&P has concerns, prompting the agency to lower its long-term credit outlook for the U.S. government from "stable" to "negative," indicating that a change in the country's credit rating might be on the horizon.
    David Beers, the global head of sovereign ratings at Standard & Poor's, spoke to reporters via teleconference.

    "A negative outlook means that in S&P's opinion, there is at least a one in three chance that over roughly the next two years, that we could lower the rating," said Beers. "It also means, conversely, that there is, in the committee's opinion, a two-thirds chance that the rating might not change."   

    Standard and Poor's says the U.S. economy is flexible and highly diversified, and that the nation's monetary policies effectively support output growth, while containing inflation.  But the agency warned that relative to its peers with the same AAA rating, the United States has what S&P considers to be very large budget deficits and rising government indebtedness.

    The U.S. debt limit is more than $14 trillion, and the United States is on course to hit that figure in a matter of weeks.  Under U.S. law, the Treasury Department cannot borrow more money unless Congress gives its approval by increasing the limit on borrowing.

    Lawmakers are debating whether to raise the debt ceiling as they consider the federal budget.  Earlier this month, a government shutdown loomed as Congress wrangled over a budget that was supposed to have been set last September.  

    Standard and Poor's says the United States has not presented a clear strategy to address the nation's long-term deficits and indebtedness.  

    S&P analyst Nikola Swann says that in the wake of the recent financial crisis, lawmakers have yet to agree on ways to address longer-term financial pressures and ways to reverse fiscal deterioration.

    "If the Congress and the president do not succeed in coming to an agreement for a plan to consolidate fiscally on a multi-year basis that we think is credible by 2013, in that circumstance, with other things unchanged, we would expect to downgrade," said Swann.

    AAA is the highest credit rating.  If the U.S. rating is downgraded, it could become more expensive for the United States to borrow money.    

    White House Press Secretary Jay Carney told reporters that the agency's decision to revise the outlook serves as a notice to lawmakers.

    "A reminder that it is important that we reach agreement on fiscal reform is always valuable, and that's essentially what it is," said Carney. "It is another indication of the importance of both sides coming together and grappling with this problem and getting to a resolution."

    Standard and Poor's says it believes there is a significant risk that lawmakers might not agree on a medium-term fiscal strategy before the 2012 national elections.

    Carney said the administration believes that the political process will outperform S&P's expectations.   

    You May Like

    Hope Remains for Rio Olympic Games

    Facing a host of problems, Rio prepares for holding the games but experts say some risks, like Zika, may not be as grave as initially thought

    Diplomats Hope to Revive Cradle of Civilization After Defeat of IS

    Diplomats from around globe gather at US State Department, discuss how to rebuild minority communities shattered by Islamic State group

    Women Voters Look Past Gender in Assessing Clinton

    She's the first female presidential nominee, but party identification, other factors outweigh gender

    This forum has been closed.
    Comments
         
    There are no comments in this forum. Be first and add one

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Uganda Unveils its First Solar-powered Busi
    X
    July 28, 2016 4:16 AM
    A solar-powered bus described by its Ugandan makers as the first in Africa has made its public debut. Kiira Motors' electric bus, Kayoola, displayed recently at a stadium in Uganda's capital. From Kampala, Maurice Magorane filed this report narrated by Salem Solomon.
    Video

    Video Uganda Unveils its First Solar-powered Bus

    A solar-powered bus described by its Ugandan makers as the first in Africa has made its public debut. Kiira Motors' electric bus, Kayoola, displayed recently at a stadium in Uganda's capital. From Kampala, Maurice Magorane filed this report narrated by Salem Solomon.
    Video

    Video Silicon Valley: More Than A Place, It's a Culture

    Silicon Valley is a technology powerhouse and a place that companies such as Google, Facebook and Apple call home. It is a region in northern California that stretches from San Francisco to San Jose. But, more than that, it's known for its startup culture. VOA's Elizabeth Lee went inside one company to find out what it's like to work in a startup.
    Video

    Video Immigrant Delegate Marvels at Democratic Process

    It’s been a bitter and divisive election season – but first time Indian-American delegate Dr. Shashi Gupta headed to the Democratic National Convention with a sense of hope. VOA’s Katherine Gypson followed this immigrant with the love of U.S. politics all the way to Philadelphia.
    Video

    Video Philadelphia Uses DNC Spotlight to Profile Historic Role in Founding of United States

    The slogan of the Democratic National Convention now underway in Philadelphia is “Let’s Make History Again” which recognizes the role the city played in the foundation of the United States in the 18th century. As VOA’s Kane Farabaugh reports, local institutions are opening their doors in an effort to capitalize on the convention spotlight to draw visitors, and to offer more than just a history lesson.
    Video

    Video A Life of Fighting Back: Hillary Clinton Shatters Glass Ceiling

    Hillary Clinton made history Thursday, overcoming personal and political setbacks to become the first woman to win the presidential nomination of a major U.S. political party. If she wins in November, she will go from “first lady” to U.S. Senator from New York, to Secretary of State, to “Madam President.” Polls show Clinton is both beloved and despised. White House Correspondent Cindy Saine takes a look at the life of the woman both supporters and detractors agree is a fighter for the ages.
    Video

    Video Dutch Entrepreneurs Turn Rainwater Into Beer

    June has been recorded as one of the wettest months in more than a century in many parts of Europe. To a group of entrepreneurs in Amsterdam the rain came as a blessing, as they used the extra water to brew beer. Serginho Roosblad has more to the story.
    Video

    Video First Time Delegate’s First Day Frustrations

    With thousands of people filling the streets of Philadelphia, Pennsylvania for the 2016 Democratic National Convention, VOA’s Kane Farabaugh narrowed in on one delegate as she made her first trip to a national party convention. It was a day that was anything but routine for this United States military veteran.
    Video

    Video Commerce Thrives on US-Mexico Border

    At the Democratic Convention in Philadelphia this week, the party’s presumptive presidential nominee, Hillary Clinton, is expected to attack proposals made by her opponent, Republican presidential nominee Donald Trump, to build a wall along the U.S.-Mexico border. Last Friday, President Barack Obama hosted his Mexican counterpart, President Enrique Peña Nieto, to underscore the good relations between the two countries. VOA’s Greg Flakus reports from Tucson.
    Video

    Video Film Helps Save Ethiopian Children Thought to be Cursed

    'Omo Child' looks at effort of African man to stop killings of ‘mingi’ children
    Video

    Video London’s Financial Crown at Risk as Rivals Eye Brexit Opportunities

    By most measures, London rivals New York as the only true global financial center. But Britain’s vote to leave the European Union – so-called ‘Brexit’ – means the city could lose its right to sell services tariff-free across the bloc, risking its position as Europe’s financial headquarters. Already some banks have said they may shift operations to the mainland. Henry Ridgwell reports from London.
    Video

    Video Recycling Lifeline for Lebanon’s Last Glassblowers

    In a small Lebanese coastal town, one family is preserving a craft that stretches back millennia. The art of glass blowing was developed by Phoenicians in the region, and the Khalifehs say they are the only ones keeping the skill alive in Lebanon. But despite teaming up with an eco-entrepreneur and receiving an unexpected boost from the country’s recent trash crisis the future remains uncertain. John Owens reports from Sarafand.
    Video

    Video Migrants Continue to Risk Lives Crossing US Border from Mexico

    In his speech Thursday before the Republican National Convention, the party’s presidential candidate, Donald Trump, reiterated his proposal to build a wall along the U.S.-Mexico border if elected. Polls show a large percentage of Americans support better control of the nation's southwestern border, but as VOA’s Greg Flakus reports from the border town of Nogales in the Mexican state of Sonora, the situation faced by people trying to cross the border is already daunting.

    Special Report

    Adrift The Invisible African Diaspora

    World Currencies

    EUR
    USD
    0.9017
    JPY
    USD
    104.72
    GBP
    USD
    0.7594
    CAD
    USD
    1.3160
    INR
    USD
    67.046

    Rates may not be current.