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

China Announces Corruption Probe into Senior Ex-Leader

Former security chief and member of Politburo Standing Committee, Zhou Yongkang, being probed for suspected 'serious disciplinary violation' More

India, US Look to Reset Ties During Kerry Visit

This week's talks will be first high level interaction between two countries since Prime Minister Narendra Modi took charge More

Video Young African Leadership Program Renamed to Honor Mandela

YALI program, launched by President Obama in 2010, aims to build skills in business, entrepreneurship, public management and civic leadership More

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.
Vietnamese Staging Chinese Product Boycott After Oil Rig Spati
X
Reasey Poch
July 28, 2014 7:18 PM
China recently pulled an oil rig from an area of the disputed South China Sea that Vietnam also claims. Despite the action, the incident has had a lingering effect on consumers in Vietnam. VOA's Reasey Poch reports from Hanoi on an effort to boycott Chinese products.
Video

Video Vietnamese Staging Chinese Product Boycott After Oil Rig Spat

China recently pulled an oil rig from an area of the disputed South China Sea that Vietnam also claims. Despite the action, the incident has had a lingering effect on consumers in Vietnam. VOA's Reasey Poch reports from Hanoi on an effort to boycott Chinese products.
Video

Video ESA Spacecraft to Land on a Comet

After a long flight through deep space, a European Space Agency probe is finally approaching its target -- a comet millions of kilometers away from earth. Scientists say the mission may lead to some startling discoveries about the origins of the water on earth. VOA’s George Putic has more.
Video

Video Young Africans Arrive in US for Leadership Program

President Barack Obama's Young African Leadership Initiative has brought hundreds of young Africans to the United States for a six-week program aimed at building their knowledge and skills in fields such as public administration and business. Out of the 50,000 young Africans who applied for the program, just one percent was accepted. VOA's Laurel Bowman caught up with some of those who made the cut and has this report.
Video

Video In Honduras, Amnesty Rumors Fuel US Migration Surges

False rumors in Central America are fueling the current surge of undocumented young people being apprehended at the U.S. border. The inaccurate claims suggest the U.S. will give amnesty to young migrants from the region. As VOA's Brian Padden reports from Honduras, these rumors trace back to President Obama's 2012 executive order to halt deportations for some young undocumented immigrants already living in the United States.
Video

Video Students in Business for Themselves

They're only high school students, but they are making accessories for shoes, fabricating backpacks and doing product photography - all through their own businesses. It's the result of a partnership between a non-profit organization that teaches entrepreneurship and their schools. VOA's Mike O'Sullivan and Deyane Moses met the budding entrepreneurs near Los Angeles.
Video

Video Astronauts Train in Underwater Lab

In the world’s only underwater laboratory, four U.S. astronauts train for a planned visit to an asteroid. The lab - called Aquarius- is located five kilometers off Key Largo, in southern Florida. Living in close quarters and making excursions only into the surrounding ocean, they try to simulate the daily routine of a crew that will someday travel to collect samples of a rock orbiting far away from earth. VOA’s George Putic has more.

AppleAndroid

World Currencies

EUR
USD
0.7305
JPY
USD
101.53
GBP
USD
0.5830
CAD
USD
1.0656
INR
USD
60.075

Rates may not be current.