SandBoxBlogs: Newsmax "Rating Agencies Warn Further Downgrade Without Deficit Plan"

Newsmax Wires:
"Rating agencies say they need to be convinced that lawmakers have a real plan in the works to reduce the growing debt if the nation is to avert future downgrades, according to a report by The Hill.

“If Congress doesn’t put in place a process that assures people that this will be addressed in a real manner . . . then there is no doubt in my mind that our sovereign debt will be downgraded,” said Steve Bell, the senior director of economic policy at the Bipartisan Policy Center. “Markets throughout the world are going to be looking at the action of the United States government.”

“It’s highly uncertain . . . because of the political circumstances,” said Steven Hess, Moody’s lead analyst for U.S. ratings. “Our stance at this point is to wait and see.”

“We’d have to assess the actual content of any temporary agreement,” Hess added. “How likely is it that that will require a credible plan to be implemented within whatever time frame they come up with? It’s the actual deficit and debt trajectories that we expect that will be the most important determinant.”

Fitch and Moody’s have both put the United States on notice that future downgrades are coming without a change in course. Furthermore, Fitch identified 2013 as a crucial year for the United States to take action on its debt. Currently, it sees better-than-even odds that it will downgrade the United States.

Senator Tom Coburn, R-Okla., a member of the Simpson-Bowles debt commission and a long time spending hawk, agrees with the findings.

“We’re going to get another downgrade. I can tell you right now. You can have a great legal case for suing the rating agencies for not downgrading us again because we have not demonstrated the political will to solve the problems,” he said in a recent interview with Bob Schieffer for CBS’s Face to Face.

Coburn argues that last year’s downgrade of the nation’s credit rating from AAA to AA+ by the ratings agency Standard and Poor’s was just the beginning, according to the CBS report. The agency made its decision just days after congress passed an 11th hour compromise to raise the nation’s debt ceiling.

Standard and Poor’s in a statement at that time said it was “pessimistic about the capacity of Congress and the Administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government’s debt dynamics any time soon.”...." (Read more?  Click title)

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