Another US downgrade within weeks?

Some Wall Street economists say a congressional deficit committee is headed for failure, making a rating cut more likely.

By Kim Peterson Oct 24, 2011 1:30PM
America's credit rating could get whacked again -- and soon.

That's what economists at Bank of America Merrill Lynch say in a recent report. And political squabbling will be very much to blame.

The problem lies with the congressional supercommittee charged with coming up with ways to reduce the deficit. The committee is turning out to be anything but super. Members spent most of September in a standoff, The New York Times reports.

"Basically we are going in circles," one member told the newspaper. "Everybody is sitting around sucking their thumb until they get some guidance on what to do."

The committee is trying to find $1.2 trillion in deficit cuts over the next 10 years, and it has until Nov. 23 to do it. Analysts are growing increasingly skeptical that the group can pull it off.

The following video discusses what the committee needs to do.

Post continues below.
"The 'not-so-super' deficit commission is very unlikely to come up with a credible deficit-reduction plan," wrote Ethan Harris, one of the economists at Bank of America Merrill Lynch. "The committee is more divided than the overall Congress."

Credit ratings agencies are all but demanding a decent long-term plan for reducing the deficit. If no plan comes forward, the U.S. could see another downgrade. In August, Standard & Poor's cut its U.S. rating by one notch to AA+ from AAA, sending markets around the world into turmoil. The Dow Jones Industrial Average fell 5.6% the next trading day.

"The credit rating agencies have strongly suggested that further rating cuts are likely if Congress does not come up with a credible long-run plan," Harris added. "Hence, we expect at least one credit downgrade in late November or early December when the supercommittee crashes."

110Comments
Oct 24, 2011 3:17PM
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wage cuts for congress.  cut their benefits by 30%,  give them increases fixed to rate 3%, limit them to one term if they do not live up to the hype they put up to get elected. also limit them to social security at the rate they say we can survive on now!!!!!!!!!!!!!!  do away with these high cost commisions they only should get what their  yearly salary is no more.
Oct 24, 2011 2:59PM
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Why are we still paying these jokers???
Oct 24, 2011 2:37PM
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Perhaps it is time to reduce the roll of Congress to drafting bills and various options for the people to vote on directly.  If they cannot agree, let the people decide.  The tech to do so didn't exist 200-300 years ago.  It does today.  It would also, hopefully, keep the people more engaged than they are today.
Oct 24, 2011 3:50PM
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We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish the Constitution for the United States of America.

United States Constitution, Article 1, Section 8, Clause 1 .. the Powers of Congress to Tax and Spend clause .. along with the Sixteenth Amendment .. appears to be poorly understood by the Ladies and Gentlemen, We the People have employed as our elected officials of this dysfunctional Congress.

 

Down grading of the credit rating of the United States of America?  More likely that this Congress has failed in their diligence to serve We the People of the United States.  It is therefore Our right and duty to remove every member of the House and Senate of this Congress, that can not demonstrate their individual effort to uphold their Constitutional powers to tax and spend with the fiduciary duty to We the People of the United States. 

 

Oct 24, 2011 3:03PM
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Is there anybody who can tell me why the party of both houses think more of thier goals then they think of us americans??
Oct 24, 2011 4:39PM
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Wait, are people surprised by the failure of this committee?  Show of hands?;)
Oct 24, 2011 4:45PM
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Is this the land of the stupid and irresponsible. We used to have the smartest business people in the world. Now we self destruct financially by bad decisions at the top.
Oct 24, 2011 3:12PM
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It's so easy to blame the politicians but I blame myself for being so STUPID to vote them in. How do you feel?
Oct 24, 2011 4:31PM
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If you try to replace the idiots in congress they will only be replace by the same idiots.   The machines control who your choices are for congress.  Who is your man?  This guy or this guy?  They are the same guy.   Brought to you by the same people that believe a corporation is a person,  and small business is not how many employees you have but how many owners there are.  

Oct 24, 2011 3:12PM
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Quit blaming each other and get the freaking job done.

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They might as well reduce the US credit ranking to junk bond status as we are never going to pay off the debt. 

We have to borrow money now just to meet interest and principle payments.
Oct 24, 2011 3:50PM
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OH PLEASE!  Another downgrade from Standard & Poors?  Aren't  they the ones who rated all those mortgage backed securities AAA+ when all they were was Junk Junk Junk?  Why aren't those "annalists" from S&P in jail?  Anyone?  Jail??
Oct 24, 2011 4:42PM
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The United States of America is toast. The great socialist experiment is over and the results are in. We lost. The systemic spending problem of government programs, antithesis to free market enterprise, has produced a black hole of unredeemable government bonds. Those on the wagon out number the one's pushing, and the government's answer? More. More taxes, more laws, more bureaucrats, more control. There are rational answers, but solutions are routinely pushed aside for the status quo, essential to maintain the personal enrichment of the players. And you sit there reading this and do nothing. Oh well, there's a chicken in the pot, a beer in the fridge, and monday night football.....why be bothered.
Oct 25, 2011 12:52AM
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Jake:  My parents didn't have a farm, never had a farm, don't have a farm--they had a cottage on one acre on Rt 1 near Kennett Square, Pa, a rural area back in the 1950's. The houses on either side of us each had @ 10 acres behind them and had animals and large gardens. There were farms across the road. I didn't say I tended the animals for life, that's one of the things I started doing for other people when I was nine and continued doing it through high school, In college [in Philadelphia] I did other odd jobs- I ran errands, walked dogs, tutored kids, did mending and altering, especially for the department and men's stores, which paid great to hem men's pants. And I learned to do invisible weaving, which also paid great, invisbly mending holes and tears in men's suits. There's always something needs doing and I searched for that.  After graduating from college I started my ad agency. Big ad agencies would call me on Thursday or Friday when they realized they wouldn't be able to meet their Monday am deadline, and I  and my team got the job done by working in shifts straight through 24/7 till Monday delivery-and of course I charged at least double or more to do it.  We had off Tuesday and Wednesday. That was what there was a need for then, and I filled that need.  I'm not bragging here, simply saying how I made my money, and it's how most successful people I know did, by looking for somebody who needs something and then designing a solution to their problem.  America is still the land of opportunity, anyone can start a business, anyone can grow rich - but it does take the sense to do what needs doing, not what you want to do, and hard work and lots of it.. That doesn't seem to be a concept popular amongst many of the younger generation. It wasn't a foreign idea to previous generations.
Oct 24, 2011 2:43PM
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with the DOD, DOE, other departments it's stunning they CAN'T find anything to cut!  let ME at them!  i can cut the deadwood!
Oct 24, 2011 4:00PM
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Some definition of terms used in this article ......

 

Lobbyist .... big business better word for bribery ....

Politician ..... big business code word for 'scratch my back and I will scratch yours'

Economy ..... big business word for the 99% of the people who whine because they are not rich.

Deficit ..... big business word for their bank balance sitting in offshore accounts paying no taxes.

Surplus .... amount of money big business have in their on shore account which they will get their Lobbyist to suck out of Economy....

 

 

Oct 25, 2011 4:47AM
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Is this the same BOA that we bailed out?

Bank of American has just moved (10/22) $75 TRILLION in risky derivatives from it’s investment side to it’s FDIC insured commercial side (savings & deposits).  US taxpayers will be forced to pay instead of Bank of America. This “deal” was done with the approval of theFederal Reserve. The FDIC is in a state of shock, awe, and outrage … and you should be too. The potential loss of $75 trillion, insured by government money, dwarfs budget deficit "austerity" talks.

Oct 24, 2011 4:23PM
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When Sen. Toomy was  named to that group, we all should have known this was going to be a total rip-off or a dismal failure. here is a guy who hates middle America , and has done more harm to middle  America then  any one in our history.
Oct 24, 2011 6:13PM
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First of all,  we are to trust the judgment of Bank of America economists .   NOT.    We should get the list of each individual on the congressional super committee (which is not hard to do) and we all should send them emails advising them that if they do not come up with a solution recommendation at least one week before the deadline that they are fired.   All voters, regardless of dems or reps vote against them at their reelection so they will never be heard from again.   If you agree, join me because that is exactly what I am going to propose to each and every person I know and I am going to follow up throughout November issuing statements  by email to all email addresses I can and requesting email forwardings as well as email all those individuals everyday.   I am retired and I have the time to do this.          JOIN ME

 

RS

Oct 24, 2011 3:37PM
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Debt:

20 Jan 2000  -   5.7 T
20 Jan 2009 - 10.6 T

GW Bush 4.9 T in 8 years

24 Oct 2011  - 14.9 T - 4.3 T

Looks like  Obama may exceed Bushes debt record in 3 years.

I know Obama was good, but not that good.

Keep spending Obama,  I like Greece.




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