S and P Warns Future Congresses: Make the Cuts Or Suffer a Second Downgrade

The day after Standard and Poor’s downgraded the U.S. to a AA+ rating from AAA, they warned of a second drop if Congress fails to make the cuts promised. Most of thinking-America knows future Congresses will NOT make the cuts, so what now, in the wake of the first ever downgrade of America’s credit?

S&P managing director John Chambers told reporters on a Saturday conference call that the toxic mix of a listless economy and political infighting will cause government debt to grow.

“Compared to some other highly rated governments, the U.S. government does not have the proactive ability to put public finances on a firm footing,” Chambers said.

His colleague David Beers said the partisan discord increases the risk that Washington will not achieve effective policy remedies.

“For that reason, there’s a lot of uncertainty about the future debt burden,” Beers said. Source: Politico

Also from Politico is this statement:

When S&P pulled the triple-A rating, it projected that net government debt would equal 85 percent of the U.S. Gross Domestic Product in 2021. That could rise to 101 percent by 2021 if the economy does not improve, Chambers said.

A debt ratio that high could knock the current U.S. rating of AA+ down to AA.

Nice. Just this week came the startling news that our debt has already reached 100% of our GDP.