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

Video Anti-Muslim Sponsor of Texas Cartoon Contest Draws Ire

Pamela Geller's supporters say she speaks truth about sensitive topic, while critics say she preaches 'that Islam is inherently evil' More

These Women Helped Save the World

Women who were known as “Rosie the Riveters” during World War II are honored by the Netherlands More

East Meets West in Exhibition Showing Chinese Influence on Fashion

Metropolitan Museum of Art exhibition juxtaposes influence of art, imagery and culture, from Imperial China to the present day, on Western fashion and design 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.
Mass Grave Exposes Entrenched Trafficking in Thailandi
X
May 05, 2015 5:50 PM
Police in southern Thailand have found two more camps believed to have held human trafficking victims -- one containing a buried skeleton. This comes just days after officials announced arrests in connection with the grisly discovery of 26 bodies in a mass grave at another location. Officials suspect as many as 400 mostly ethnic Rohingya from Myanmar were being held for ransom at the remote camp near the Malaysian border. Steve Sandford reports on developments in the case.
Video

Video Mass Grave Exposes Entrenched Trafficking in Thailand

Police in southern Thailand have found two more camps believed to have held human trafficking victims -- one containing a buried skeleton. This comes just days after officials announced arrests in connection with the grisly discovery of 26 bodies in a mass grave at another location. Officials suspect as many as 400 mostly ethnic Rohingya from Myanmar were being held for ransom at the remote camp near the Malaysian border. Steve Sandford reports on developments in the case.
Video

Video Russia's 'Victory Day' Glory Over Nazis Overshadowed by Ukraine

ussia is preparing to commemorate the 70th anniversary of the end of World War II, known since the Soviet era as “The Great Patriotic War,” with a massive parade on May 9th of military hardware and millions of medals handed out to veterans or their relatives. But critics say the Soviet-style display of power and nationalism overshadows tragic scars during and after the war that still influence politics and foreign policy, especially in the current Ukraine crisis.
Video

Video WWII Anniversary Brings Old Friends and New Worries

The 70th anniversary of the end of World War II has special significance, with Russia becoming more assertive in Ukraine and sending its military planes to the edges of western countries’ airspace. Changes in the geostrategic balance and the transatlantic relationship are felt across the continent, not least in German towns that have hosted U.S. military bases since the defeat of Nazi Germany. VOA’s Al Pessin visited Schweinfurt, Germany, where a large base closed last year.
Video

Video Abraham Lincoln Funeral Re-created for 150th Civil War Anniversary

Over the last four years, commemorative events to mark the 150th anniversary of the U.S. Civil War have brought thousands of visitors to battlefields and historic landmarks across the country. As VOA's Kane Farabaugh reports from the Midwest state of Illinois, the final event in the Civil War's sesquicentennial honors the final journey home of the slain American President, Abraham Lincoln.
Video

Video Campaign Raises Money to 'Uncuff' Journalists

Beginning Sunday – World Press Freedom Day – the Committee to Protect Journalists, a private U.S. group, is launching a campaign to bring attention to their plight and encourage efforts to free them. Deborah Block reports.
Video

Video Volunteers Pull Together to Aid Baltimore Riot Victims

Calm has returned to Baltimore, Maryland, after authorities lifted an overnight curfew imposed almost a week ago to stem the rioting that followed the funeral of Freddie Gray - the 25-year-old black man who died of spinal injuries suffered while in police custody. Six police officers, three of them African-American, have been charged in connection with his death. Baltimore is now trying to get back to normal, in part with the help of volunteers who responded to calls to help those in the city'
Video

Video From Aleppo To Berlin: Band of Brothers Escapes Civil War

Hundreds of thousands of Syrians have fled the civil war in their country and journeyed to Europe by boat across the Mediterranean. It is a terrifying ordeal with dangers at every turn. A group of Syrian brothers and their friends describe their ordeal as they try to reach Germany. VOA's Henry Ridgwell reports. ...
Video

Video Rural Nepal Suffers Brunt of Quake’s Devastation

Nepal is still coming to grips with the full extent of the devastation and misery caused by last Saturday’s magnitude 7.8 earthquake. Some of the hardest-hit communities have been cut off by landslides making it difficult to assess the precise toll. A VOA News crew has been among the first to reach a few of the smaller, remote communities. Correspondent Steve Herman reports from the Sindhupolchak district, east of Kathmandu, which suffered greatly in Nepal’s worst quake in more than 80 years.
Video

Video Obama Praises Work of 3 Immigrant Journalists

President Barack Obama met with three immigrant journalists at the White House Friday to praise them for their work ahead of World Press Freedom Day, May 3. In attendance: Dieu Cay (his pen name) a blogger from Vietnam recently released from prison; Lily Mengesha from Ethiopia who was harassed and detained for exposing the marrying off of young girls as child brides, and Fatima Tlisova, an ethnic Circassian from the North Caucasus region of Russia, who works for VOA's Russian Service.
Video

Video Middle East Atheist Channel Defies Taboo

In Egypt, a deeply religious country in a deeply religious region, atheism is not only taboo, it is dangerous. It is sometimes even criminal to publicly declare nonbelief. Despite the danger, one group of activists is pushing back with a new online channel that defends the right not to believe. VOA’s Heather Murdock reports.
Video

Video Nepal Quake Survivors Tell Their Stories

Against all hope, rescuers have found a few more survivors of the devastating earthquake that hit Nepal last Saturday. Mountain climbers and hikers trapped in remote places also have been airlifted to safety, and aid is finally reaching people in the areas closest to the quake's epicenter. Survivors and rescuers are now recounting their experience. Zlatica Hoke has this story.
Video

Video Lessons for Germany, Europe Remain on Anniversary of WWII's End

The 70th anniversary of the end of World War II will be marked May 8-9 in all European countries except Germany, which lost the war. How is the war viewed there, and what impact is it still having? From Berlin, VOA’s Al Pessin reports.
Video

Video Nepal Town Destroyed By Quake Counts Itself Lucky

Foreign search teams on Wednesday began reaching some of the communities outside Kathmandu that suffered worse damage than Nepal’s capital from last Saturday’s massive earthquake. VOA Correspondent Steve Herman is in Sankhu - a town of about 10,000 people - where there is relief the death toll is not higher despite widespread destruction.
Video

Video Somali Hotel Chain Owner Strives to Make a Difference

Many in the Somali diaspora are returning home to make a new life despite the continuing risks. Since 2011 when a military campaign against Al-Shabab militants began making progress, members of the diaspora community have come back to open hospitals, schools, hotels, restaurants and other businesses. Abdulaziz Billow in Mogadishu profiles the owner of a chain of hotels and restaurants who is helping to bring change to the once-deadly Somali capital.
Video

Video Child Migrants Cross Mediterranean Alone, Face Unknown Future

Among the thousands of migrants making the deadly journey by boat to Europe, there are unaccompanied girls and boys. Some have been sent by relatives to earn money; others are orphaned or fleeing war. From a shelter for young migrants in the Sicilian town of Caltagirone, VOA's Henry Ridgwell reports.

VOA Blogs