Credit rating relies on U.S. plan

May 26, 2012 at 2:25 PM
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WASHINGTON, May 26 (UPI) -- Officials at credit rating services said the United Stated needed a credible plan to avoid another downgrade of the country's credit rating.

The odds of the country coming up with a solid policy, even a temporary one, in time, are not good, some analysts say. Nevertheless, ""We'd have to assess the actual content of any temporary agreement," said Steven Hess, lead analyst for U.S. ratings at Moody's Investors Services, The Hill Newspaper reported Saturday.

Moody's and Fitch's Ratings have not lowered the country's credit rating, but they have both assigned the U.S. a negative outlook, which implies the United States needs to act to avoid a downgrade.

"Our stance at this point is to wait and see," Hess said.

He added, "It's the actual deficit and debt trajectories that we expect that will be the most important determinant."

But time is also a critical factor.

Fitch has said it would issue a report on U.S. credit by the end of 2013.

In the meantime, "the rhetoric that's being formed is causing a lot of uncertainty," said Beth Ann Bovino, deputy chief economist for Standard & Poor's, the rating agency that has lowered the country's rating, dropping it from triple A to AA+ in August 2011.

House Speaker John Boehner, R-Ohio, recently said the Republican party would stonewall any attempt to raise the debt ceiling after the November election without an agreement on spending cuts.

That stance in 2011 helped create the gridlock that walked the United States right up to the edge of default. A last-minute agreement was reached to raise the debt ceiling, but the apparent dysfunction in Washington contributed to the downgrade, S&P said at the time.

Bovino called Boehner's recent warning "deja vu."

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