Despite yesterday’s sobering news that credit rating agency Standard & Poor’s had downgraded its outlook on U.S. debt from “stable” to “negative,” U.S. Treasury Secretary Timothy Geithner is assuring the nation (and nervous investors) that there is “no risk” the United States will lose its cherished AAA credit rating. Geithner spoke against the assessment by Standard & Poor’s this morning on Fox Business Network, CNBC, and Bloomberg Television, saying he is confident Republicans and Democrats will put reforms in place to bring down deficits and will raise the debt ceiling on time. “They're not going to play around with that, because again, you don't want to call into question the basic credit-worthiness of the United States of America,” he said. “The prospects for bipartisan agreement are better than they have been in a long period of time.” [Check out a roundup of political cartoons on the budget and deficit.]
But analysts with Standard & Poor’s were not so optimistic when they announced the downgrade yesterday. “More than two years after the beginning of the recent crisis, U.S. policymakers have still not agreed on how to reverse recent fiscal deterioration or address longer-term fiscal pressures,” analyst Nikola Swann said in a press release. “We believe there is at least a one-in-three likelihood that we could lower our long-term rating on the U.S. within two years.” [Read what S&P's outlook downgrade means.]
Moody’s Investors Service, the other preeminent credit rating agency, kept its outlook of the U.S. rating at “stable.”
What do you think? Will the United States lose its AAA credit rating? Take the poll and post your thoughts below.
--Mallie Jane Kim
Previously: Will $4 gas affect your summer plans?