Given the Standard & Poor’s decision to downgrade the United States’ top credit rating one notch to AA+, FOX Business Network will present a special live edition of “The Willis Report” on Sunday, August 7, at 9 PM/ET. Host Gerri Willis will enlist a panel of experts to monitor the opening of international markets and offer insights on what to expect for United States markets in the week ahead.
S&P made the announcement of removing the U.S. government from its list of risk-free borrowers late Friday night. Its statement says:
“We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process. We also believe that the fiscal consolidation plan that Congress and the Administration agreed to this week falls short of the amount that we believe is necessary to stabilize the general government debt burden by the middle of the decade.
Our lowering of the rating was prompted by our view on the rising public debt burden and our perception of greater policymaking uncertainty, consistent with our criteria. Nevertheless, we view the U.S. federal government’s other economic, external, and monetary credit attributes, which form the basis for the sovereign rating, as broadly unchanged.”
In short, S&P sees the political implications of Washington’s inability to come to an agreement on how to reduce the country’s debt as too great to sustain the United States’ sterling credit rating.