Fitch Threatens Downgrade If Debt Deal Is Too Weak
Meanwhile, Pat Toomey introduces backup bill
By Kevin Spak, Newser User
Posted Jan 15, 2013 7:33 AM CST
In this Sept. 23, 2008 file photo, the amount of U.S. national debt on Sept. 23 is shown on the National Debt Clock in New York.   (AP Photos/Bebeto Matthews, file)

(Newser) – The US credit rating is once again in danger thanks to a debt ceiling showdown. Fitch today announced that it may downgrade the US even if lawmakers manage to strike a deal, CNN Money reports. Fitch already has a negative outlook on the US' AAA rating, and said that would turn into a downgrade "in the absence of an agreed and credible medium-term deficit reduction plan that would be consistent with sustaining the economic recovery."

Ben Bernanke urged Congress to lift the debt ceiling yesterday, saying that refusing to do so would be like a household trying to improve its credit by defaulting on its credit card debt, the Wall Street Journal reports. Pat Toomey, meanwhile, introduced a just-in-case bill that would prioritize the order the Treasury paid its bills, ensuring it paid its debt interest, Social Security benefits, and military pay, and authorizing it to borrow enough to pay those expenses if it fell short.

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Showing 3 of 15 comments
JoeQ
Jan 15, 2013 12:07 PM CST
Yeah, and a lowered rating could result in higher interest rates that are out of the feds control, which could make real revenues go down even while tax rates go up. It's a dangerous and stupid game of chicken.
thesecondsfade
Jan 15, 2013 12:01 PM CST
Does anyone realize that the "debt" is not real? The Federal Reserve prints money for the US and then charges interest on it. We can pay our debts to other countries and such, but the debt we owe to the Fed is just made up. Why pay to an unaudited central bank?
Pragmatist
Jan 15, 2013 10:14 AM CST
Easy as 1-2-3 1) Agree upon significantly reduced spending levels... ... this one is on you Democrats as the Republicans agreed to your new tax rate increases 2) Agree upon significantly reduced tax credits, exemptions, and deductions... ... this one is on you American citizens as you ... assess the level you are receiving from vs giving to the government ... critically determine whether you or your children/grandchildren should pay 3) If net of above results in a deficit balance... go back to #1 NO MORE DEBT GROWTH!!!