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The U.S. Credit Rating Might Get Downgraded Again, But Does Anyone Care?

The Daily Beast

Wednesday, November 14, 2012

Once again President Obama and the congressional Republicans are in a showdown over the debt: the GOP wants to preserve low tax rates and enact large spending cuts, while the president wants less severe cuts and higher tax revenues from high earners. And just like last year’s tussle over the debt ceiling, ratings agencies like Fitch, Standard & Poor’s, and Moody’s are threatening to ding America’s sovereign credit rating if a long-term deficit deal isn’t reached. The only problem is that it’s unclear who, if anyone, cares about what the major ratings agencies have to say…

Steve Bell, a former Senate Budget Committee staffer and investment banker who is now at the Bipartisan Policy Center, says that “we’ve warned people a lot about what will happen if we don’t get spending and tax balanced.” But every time, interest rates on U.S. debt continue to fall. He said that when he goes to the Hill, the threats no longer mean much: interest rates are low despite S&P’s downgrade in August 2011, and there are no signs of inflation.   

2012-11-14 00:00:00
The Daily Beast