An 'Oh Please!' Moment: Is S&P Running Interference to Help Crush Social Security and Medicare?

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Tue Apr-19-11 11:07 AM
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An 'Oh Please!' Moment: Is S&P Running Interference to Help Crush Social Security and Medicare?

via CommonDreams:

Published on Tuesday, April 19, 2011 by This Can't Be Happening
An 'Oh Please!' Moment: Is S&P Running Interference for the Right to Help Crush Social Security and Medicare?

by Dave Lindorff

Today’s breathless anxiety-inducing headline was that Standard & Poors, the rating agency, has issued a “negative outlook” warning on US sovereign debt, claiming that the US, in comparison with other countries with a top AAA credit rating, has "very large budget deficits and rising government indebtedness and the path to addressing these is not clear to us". S&P warned that there was a “a one in three chance that the US could lose its AAA rating in two years because of its mounting debt.”

The ratings firm--one of three global companies that Wall Street relies upon to establish the credit ratings of companies and nations around the world--said its analysts had “little confidence” that the Obama administration and the divided Congress would reach any agreement on a deficit-reduction plan before the next national election in the fall of 2012, and that they doubted that any such plan would be adopted until after 2014, two whole Congressional elections away.

So far, the other two ratings agencies, Moody’s and Fitch Ratings, have not followed suit. Moody’s issued a statement saying, ““Moody’s rating for the US is Aaa and remains stable,” though the company warns that “an upward debt trajectory and increasing fiscal pressures could increase the likelihood of an “outlook change” within “the next two years.”

Meanwhile, Fitch Ratings, which unlike Moody’s and S&P, is based in Europe, took an even more sober stance, saying, “In Fitch's opinion, the likelihood of the U.S. government failing to honor its financial obligations and in particular make due and full payments on U.S. Treasury securities is extremely low. Ultimately, the recognition of the dire consequences of failing to raise the debt ceiling in a timely manner will prevail over differences on the more fundamental issue of how best to place U.S. public finances on a sustainable path over the medium- to long-term.” Fitch goes on to add, “The brinkmanship over the debt ceiling and the 2011 budget will be resolved...Fitch does expect that the tough choices on tax and spending will be made - as is starting to be seen at the state and local level - that are necessary to place public finances on a sustainable path.” Unlike S&P and Moody’s, Fitch’s analysts note the critical point that “The U.S. 'AAA' status is underpinned by the flexibility and dynamism of its economy, as well as the exceptional financing flexibility that derives from the U.S. dollar's role as the world's predominant reserve currency.” ..............(more)

The complete piece is at: http://www.commondreams.org/view/2011/04/19-1