Standard & Poor's yesterday not only defended its decision to downgrade America's once-vaunted AAA credit rating for the first time, it warned that a second downgrade could be on the way if the US doesn't get its act together. “Compared to some other highly rated governments, the US government does not have the proactive ability to put public finances on a firm footing,” said an S&P exec.
Another S&P exec tells Politico that Washington's hyper-partisan atmosphere has cast "a lot of uncertainty about the future debt burden." S&P yanked the AAA credit rating based on projections that federal debt would equal 86% of the GDP in 2021; if the economy or the super committee don't ride in to save the day, that figure could hit 101%. Combined with the nation's increased costs in borrowing, S&P says that would be enough to justify another downgrade. (Read more Standard & Poor's stories.)