S&P Issues Warning On U.S. Credit Rating
MICHELE NORRIS, Host:
As NPR's John Ydstie reports, the warning puts even more pressure on policymakers in Washington to cut federal deficits.
JOHN YDSTIE: The move by Standard & Poor's today was an official warning to investors that if the U.S. doesn't get its finances under control, it might not be able to fully repay its debts in the future. Of course, there have been many others sounding the same warning.
NORRIS: I think that's a statement by S&P that they are worried about the same things everybody else is worried about.
YDSTIE: That's Clint Stretch, a Washington budget specialist at Deloitte, a consulting and financial advisory firm.
NORRIS: They haven't said it's time to throw in the towel on U.S. debt, but they are saying what we all know, which is at some point in the not-too-distant future we've got to get very serious about this.
YDSTIE: Harvard economist Ken Rogoff also thinks the warning could be useful.
YDSTIE: I think it helps. I think for those who want to get something done, saying, look, the S&P is downgrading us, and by the way, some of the world's biggest bond funds are pulling out of U.S. debt.
YDSTIE: At the White House, spokesman Jay Carney was quick to remind everyone that the U.S. still retains its top-rated AAA rating, and he said the warning from S&P could be helpful.
NORRIS: A reminder that we reach agreement on fiscal reform is always valuable.
YDSTIE: But Carney took issue with a statement at the heart of the rating agency's negative outlook. S&P said it had little confidence that the White House and Congress could reach a deficit-cutting agreement before the presidential election in 2012. Carney said the administration believes the prospects are better.
NORRIS: We think that the political process will outperform S&P expectations. The president is committed, as he made clear in his speech on Wednesday, to moving forward in a bipartisan way to reach common ground on this important issue.
YDSTIE: John Ydstie, NPR News, Washington.
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