S&P Warns Lawmakers Of Potential Debt Limit-Related Downgrade

WASHINGTON - Standard & Poor's has warned lawmakers privately that it would downgrade the country's debt if the Treasury Department is forced to prioritize payments because Congress does not raise the debt limit, a congressional aide said on Thursday.

The warning undercuts an argument made by some Republicans that the country's credit rating would not be affected as long as the Treasury Department made debt service a priority over other obligations.

(Reporting by Andy Sullivan; Editing by Vicki Allen)

Copyright 2011 Thomson Reuters. Click for Restrictions.

Comments

[vobox3343]

04:50 PM on 07/14/2011

Ok, a Republican lie has already been debunked. Do what you must, Mr. President.

[Mark Cormier Arizona]

04:02 PM on 07/14/2011

It's called kicking the can down the road...........at some point you have to stop and pick it up.

[evans566]

03:22 PM on 07/14/2011

Standard and Poors' opinions are for hire, so why should we worry about what they say? They rated all those credit default swaps as AAA investments, remember? They rated all those banks as AAA until they suddenly crashed at the start of Great Recession. They rated Madoff's investments as AAA until it was proven to be a complete fraud. So, whose paying for their opinion now?

[Botany5000]

03:21 PM on 07/14/2011

Wouldn't it been nice if S&P had rated the sub-prime mortgage securities as
CCC or lower,as they were
instead of AAA as they did?

Who the h*ll trusts these guys anymore,
since they are so obviously, so easily,,, bought?

[gomezrules]

03:04 PM on 07/14/2011

Entities like S & P's and Moodys' have a virtual monopoly among themselves (there are actually 3 credit rating agencies that dominate the industry, the above 2 and Fitch's), thanks to govt actions that ensured that.

http://en.wikipedia.org/wiki/Credit_rating_agency

Those 3 agencies are thus going to do as they are told, and that's why whatever analysis they provide is suspect. It's why we get inanities like every dollar of unemployment actually results in a 'return' that would be the envy of any investment vehicle (which also provided ammo for the likes of the CBO to claim the same thing, except in even HIGHER amounts!).

http://o.seattletimes.nwsource.com/html/nationworld/2013560135_joblesspay01.html

[rebar10issguy]

02:57 PM on 07/14/2011

guess the gop/tea bag set don't care how much money they lose when the stock marrket crashes after the government default. they'll just have the taxpayers bail them out; a TARP fund set up just for the GOP/teabagger pols
i'm putting my money into german and canadian bonds and euros; the dollar is going to be TP

[Mark Cormier Arizona]

04:01 PM on 07/14/2011

Im in cash.....waiting for the plunge to buy back in..........it's really too easy.....fish in a barrel.

[nopojoe]

02:44 PM on 07/14/2011

This of course is the same Standard and Poors' who told us Enron was a well managed company, has used its ratings to upgrade to AAA status bonds that they rated weeks earlier as junk grade. S&P routinely gives government and municipel bonds lower ratings than corporate bonds, although government bonds are much more secure than corporate. I just suggest we give S&Ps voice more credit than they deserve.

[ALiberalKidd]

12:51 PM on 07/14/2011

What is the credit rating of S&P/Dow Jones/Wall Street?

How can the US be so much in the red/deficit/debt and still have a good credit rating?

Other than Germany, China, Japan, or oil rich Middle East states, how many fiscally sound nations are there to justify having a credit rating agency? If there are only five hundred consumers and four or five rich ones, what would be the purpose of a credit rating agency?

Why the fed cannot just cut a one-time check, and pay China, and other foreign debtors, then start over.

Why does this government loan money to private banks at a low rate, then borrow that same money back from private banks at a higher rate? This seems like the old revolving check scheme.

The US government should borrow from the people's future revenues, and America's private/too big to fail banks should borrow from China, each other, or else where; of course most American banks are not credit worthy enough to borrow from China, Germany, Saudi Arabia, or any other source but their US piggy bank.

[izmophonik]

01:45 PM on 07/14/2011

short answer. We have a good credit rating because at the present, we have the ability to pay. After the August deadline, we won't which will kill our rating.

[RecreationalPilot]

02:33 PM on 07/14/2011

Just like missing a car payment by a day.

Your 6.9% credit cards go to 30%. Oh, you want to refinance???

[Chucktheman]

12:36 PM on 07/14/2011

How much did TARP cost us when the Bush administration came up with that? Jobs, let GM and Chrysler fail they said, they are only American jobs. 2 wars, we had to fight, because we got attacked on who's watch? Where were the Republicans sleeping for 8 years? Lets borrow some more money from Red China and give it to the wealthy, we can afford to pay it back. Why do these things enter my head? Im an average working American. I should be thinking about Kraft dinner.

[RecreationalPilot]

02:34 PM on 07/14/2011

Kraft is one of those companies that use a powerful food lobbying group.

[MikeOptv2]

12:33 PM on 07/14/2011

I see some very desperate people trying hard to somehow make this President Obama's fault, but the fault belongs solely with the Republican Party. They were playing a dangerous game of cat and mouse from the very beginning, thinking they would have their way or the highway. And now their childish and irresponsible game playing is beginning to more clearly reveal itself as being exactly what President Obama and Democrats in congress warned it would be, a serious catastrophe for the country's recovery. It also doesn't help that seniors will suffer because of the Republican Party's actions as well.

The debt ceiling was raised like 7 times under George W. Bush. Why can't the Republicans just do the responsible thing and raise it now without trying to politicize it?

[saintaug1]

12:04 PM on 07/14/2011

Obama's buddy Imelt with GE paid no federal income tax last year. What about his friends?

[Chucktheman]

12:28 PM on 07/14/2011

Everyone should pay. GE is one of the worst offenders and no one will defend them. Do they even do business in the US anymore?

[pooka47401]

01:05 PM on 07/14/2011

Yes, GE has a plant in Bloomington IN. They have threatened to close it down and send it to Mexico, for years, but now they have trouble with quality in Mexico so have chosen to keep it open, for now.

[saintaug1]

12:04 PM on 07/14/2011

What the article so cleverly leaves out is that S&P also said that if the trajectory of the deficit isn't corrected by 2013, then they will lower the rating. So kicking the can down the road, just ain't gonna get it.

[notdarkyet]

11:56 AM on 07/14/2011

People need to know that we really hit our debt limit in May and Treasury has been rearranging the deck chairs on the Titanic since then to give the recalcitrant R party time to get their life jackets on. This deadline is no joke.

[zmanusmc]

12:25 PM on 07/14/2011

Its a two way street - we are spending more than we take in. Controlled spending and reduced entitlements, plug tax loopholes, stop unneeded subsidies, eliminate duplication in government, stop the wars and close select foreign bases, wise up on foreign aid, stop illegal immigration - will all help balance the budget and help stop the credit crisis. But Obama, the Democrats and some Republicans don't want to take the hard action.

[Chucktheman]

12:30 PM on 07/14/2011

So far only one party is taking any action.

[moby49]

11:56 AM on 07/14/2011

No matter who says it, the TPs won't believe it and just won't care. This is going to split the astro-turf TPs from the true zealots. Unfortunately, the split will come after the damage is done.

[mancoff]

11:48 AM on 07/14/2011

If the U.S. does get it's credit rating downgraded and the country does see humongus interest rates and stocks plummeting etc, people like Michele Bachmann, Pawlenty, Cantor, republican congressmen who say the president is lying and fear mongering, will all of sudden have memory relapse and say, the President should have seen this coming, he should have warned us. When you are this devious, when you have no qualms about lying, about letting people suffer for your own political gain then no bridge is too far for your evil self serving puposes, It's pretty hard to combat people who have no scruples while trying to maintain yours.

Obama will never be able to overcome his inate sense of fair play and standard of ethics and republicans count on that to bring him down. God spared us McCain, (who swore the economy was strong two days before it collapsed and who gave us Palin) but even He is tired of the intolerant stupidity in this country. I figure, He will watch us bring ourselves down and then start all over again with a new generation of americans who could care less about color, sexual preference, religion, and power and more about civil rights for all, heath care as a right not a privledge, and the pursuit of happiness in a country where we do concern ourselves with the least of us.

Until then, we're gonna have nothing but, Duhhhhhhh, duhhhhh, duhhhh and more duhhhhhhhh