In 2011, the United States emerged from a damaging budget battle with a
downgrade of its pristine triple-A rating for the first time in history.
In 2013, it could be dealt even a bigger blow.
The battle over avoiding the so-called "fiscal cliff" is the first of a likely series of partisan confrontations in Washington in the coming year that, if not resolved, could cause more downgrades of the U.S. credit rating.
Read more: http://www.cnbc.com/id/49831032
The battle over avoiding the so-called "fiscal cliff" is the first of a likely series of partisan confrontations in Washington in the coming year that, if not resolved, could cause more downgrades of the U.S. credit rating.
"The
rating is in the hands of policymakers," said John Chambers, chairman
of Standard & Poor's sovereign rating committee, the agency that
downgraded the United States in August 2011.
In
interviews with Reuters since the Nov. 6 election, all three major
rating agencies said cutting the U.S. debt rating - still among the
world's strongest - is highly likely if next year's budget process
replays 2011's debt ceiling debacle or if the seemingly simple goal of cutting deficits goes unmet.
Should
that happen, it could have a detrimental effect on the country's cost
of borrowing and could also shift some investment away from the United
States, though the country's big markets and attractiveness as a safe haven are likely to limit those effects.
In
the absence of a sustainable, coherent medium-term vision for the U.S.
federal budget, which has produced deficits above $1 trillion in each of
the last four years, the rating will fall.
Read more: http://www.cnbc.com/id/49831032
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