News / USA

S&P: Further US Credit Downgrade Possible

US flag flies from the New York Stock Exchange in New York, August 5, 2011
US flag flies from the New York Stock Exchange in New York, August 5, 2011
Michael Bowman

The U.S. government’s credit rating could be downgraded even further, according to the rating agency that removed the United States from a list of top-tier creditworthy nations.

Standard and Poor’s judgement

Days after Standard and Poor’s made headlines across the globe by saying the United States no longer merits its highest AAA credit rating, the firm’s managing director, John Chambers, says another downgrade cannot be ruled out if America’s worsening fiscal imbalances do not improve.

“If the fiscal position of the United States deteriorates further, or if the political gridlock becomes more entrenched, then that could lead to [another] downgrade.

Speaking on ABC’s This Week television program, Chambers put the chances of a further credit downgrade at one-in-three. But he also noted that it is possible for nations to regain their AAA rating if they demonstrate fiscal restraint over a period of years.

US & World's markets

The possibility of another downgrade can hardly reassure nervous stockholders. Even before Standard and Poor’s announcement late Friday, investors showed their willingness to sell off stocks. U.S. and other markets suffered some of their steepest losses of the year last week.

But market jitters stem from more than U.S. fiscal woes, according to the head of Standard and Poor’s government debt rating unit, David Beers.

“A lot of what is worrying the markets is the unfolding story in Europe, and also a perception from a global economic perspective that the world economy may be slowing down," he said. "So I think the markets are reacting to a lot of factors, not just what S&P [Standard and Poor’s] said on Friday.”

US debt

The U.S. national debt stands at $14.3 trillion, the cumulative total of annual federal deficits. Last week, President Barack Obama signed a bill to raise the federal borrowing limit and shave more than $2 trillion from the deficit over ten years. In the months leading up to the agreement, Democratic and Republican negotiators were unable to agree on a more ambitious, $4 trillion deficit-reduction goal, with Republicans adamantly opposed to any tax hikes and Democrats reluctant to force savings from costly programs that provide income and health care for retirees.

Partisan finger-pointing has been rampant in Washington in recent months, and continued after the S&P downgrade. Appearing on CBS’ Face the Nation program, top Obama political strategist David Axelrod placed the blame on the Tea Party faction of the Republican Party. Axelrod noted that some Tea Party members of Congress refused to support any deal to raise the U.S. debt ceiling, even if doing so risked a U.S. default on its debt obligations.

“They played brinksmanship with the full faith and credit of the United States. This is essentially a Tea Party downgrade," said Axelrod. "The Tea Party brought us to the brink of a default.”

Not so, according to Congressman Paul Ryan, chairman of the Budget Committee in the Republican-controlled House of Representatives. Appearing on Fox News Sunday, Ryan noted that the House passed a budget that would have slashed the federal deficit by more than $5 trillion over 10 years, but that the bill was blocked in the Democratically-controlled Senate. He blamed out-of-control federal spending for the credit downgrade.

“It is because Washington has not gotten its fiscal house in order. We [Republicans] passed a budget.”

In downgrading U.S. creditworthiness, Standard and Poor’s listed Washington’s seeming inability to overcome partisan gridlock as sapping faith in the nation’s ability to confront its fiscal challenges.

The Obama administration has accused S&P of using faulty math in its assessment, saying the firm overestimated the projected rise in the national debt by $2 trillion.

You May Like

Is Air Travel Safe?

Aviation expert says despite tragic losses of Malaysian Airlines flights 370 and 17, industry experienced lowest fatality rate in recorded history last year More

Multimedia 100 Days Later, Nigerian Girls Still Held

Activists holding rallies in Nigeria and several other countries to mark 100th day of captivity for more than 200 schoolgirls being held by Boko Haram More

Chocolate Too Bitter? Swap Sugar for Mushrooms

US food technology company develops fermentation process using mushrooms to reduce bitterness in cocoa beans, believes it will cut sugar content in candy 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.
IAEA: Iran Turns its Enriched Uranium Into Less Harmful Formi
X
July 22, 2014 10:26 AM
Iran has converted its stockpiles of enriched uranium into a less dangerous form that is more difficult to use for nuclear weapons, according to the United Nations’ Atomic Energy Agency. The move complies with an interim deal reached with Western powers on Iran's nuclear program last year, in exchange for easing of sanctions. Henry Ridgwell reports for VOA from London.
Video

Video IAEA: Iran Turns its Enriched Uranium Into Less Harmful Form

Iran has converted its stockpiles of enriched uranium into a less dangerous form that is more difficult to use for nuclear weapons, according to the United Nations’ Atomic Energy Agency. The move complies with an interim deal reached with Western powers on Iran's nuclear program last year, in exchange for easing of sanctions. Henry Ridgwell reports for VOA from London.
Video

Video Relic of Saint Draws Catholics Worried About Immigration Issue

A Roman Catholic saint who is a figure of devotion for those crossing the border into the United States is attracting believers concerned about the plight of undocumented immigrants. Mike O'Sullivan reports from Los Angeles, where a relic of Saint Toribio has drawn thousands to local churches.
Video

Video Ukraine Rebels Surrender MH17 Black Boxes

After days of negotiations, a senior separatist leader handed over two black boxes from an airliner downed over eastern Ukraine to Malaysian experts early Tuesday. While on Monday, the U.N. Security Council unanimously demanded that armed groups controlling the crash site allow safe and unrestricted access to the wreckage.
Video

Video In Cambodia, HIV Diagnosis Brings Deadly Shame

Although HIV/AIDS is now a treatable condition, a positive diagnosis is still a life altering experience. In Cambodia, people living with HIV are often disowned by friends, family and the community. This humiliation can be unbearable. We bring you one Cambodian woman’s struggle to overcome a life tragedy and her own HIV positive diagnosis.
Video

Video Nature of Space Exploration Enters New Age

Forty-five years ago this month, the first humans walked on the moon. It was during an era of the space race between the United States and the Soviet Union. World politics have changed since then and -- as Elizabeth Lee reports -- so has the nature of space exploration.
Video

Video Chicago’s Argonne Lab Developing Battery of the Future

In 2012, the U.S. Department of Energy’s Office of Science awarded a $120 million grant to a new technology center focused on battery development - headquartered at Argonne National Laboratory in suburban Chicago, Illinois. As VOA’s Kane Farabaugh reports, there scientists are making the next technological breakthroughs in energy storage.
Video

Video In NW Pakistan, Army Offensive Causes Massive Number of Displaced

Pakistan’s army offensive in North Waziristan has resulted in the large-scale displacement of the local population. VOA's Ayaz Gul reports from northwest Pakistan where authorities say around 80 percent of the estimated 1 million internally displaced persons [IDPs] have settled in Bannu district, while much of the remaining 20 percent are scattered in nearby cities.
Video

Video Kurdish Peshmerga Force Secures Kirkuk, Its Oil

The Kurdistan regional government has sent its Peshmerga troops into the adjacent province of Kirkuk to drive out insurgents, and to secure the area's rich oil fields. By doing this, the regional government has added a fourth province to the three it officially controls. The oil also provides revenue that could make an independent Kurdistan economically strong. VOA’s Jeffrey Young went out with the Peshmerga and filed this report.
Video

Video Malaysia Reeling: Second Air Disaster in Four Months

Malaysia is reeling from the second air disaster in four months involving the country’s flag carrier. Flight 340 vanished in March and despite an extensive search, no debris has been found. And on Thursday, Flight 17, likely hit by a surface-to-air missile, came apart over eastern Ukraine. The two incidents together have left more than 500 people dead. VOA Correspondent Steve Herman reports from Kuala Lumpur.

AppleAndroid