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News Link • Economy - Economics USA

Debt warning rocks US economy

• RawStory.com

WASHINGTON (AFP) – Ratings agency Standard & Poor's has cut the outlook on US sovereign debt to "negative", raising doubts about Washington's ability to tackle its huge debt and fiscal deficits.

The move, the first time S&P has ever placed such a warning on the US's gold-standard AAA rating, raised the stakes as Washington's political leaders began grappling over how to address the government's yawning budget shortfall over the long term.

Administration officials said S&P "underestimates" political leaders' ability to agree a path out of the country's worst financial jam since the 1930s.

But S&P said it could not foresee any deal between Democrats and Republicans until after the November 2012 presidential and congressional elections, and that without one, the problem was only going to worsen.

 

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