viernes, 14 de enero de 2011

Uncle Sam Wants His AAA Rating

 
Is Wall Street listening to the Tea Party?  Two major credit ratings agencies warned Thursday that the United States might tarnish its triple-A credit rating if its national debt kept growing.

It was not the first time the agencies, Standard & Poor’s and Moody’s Investors Service, warned that the nation’s gilt-edged rating might fall into jeopardy.

But the two statements, made within hours of each other, were seized on by deficit hawks as further evidence that the government must reduce spending and debt to avert disaster. That is just what many Tea Party supporters insist.

But many economists say the reckoning, if it comes, is still years or even decades away.

The bond market shrugged at Thursday’s news. Indeed, even some experts who want to see the deficit reduced said now is not the time to cut federal spending drastically, given the weakness in the economy and high unemployment.

But others see the mounting national debt as a potential danger. What once seemed unthinkable — that one day the United States government would no longer be accorded the highest credit rating — is now not only thinkable, but increasingly probable.

“I am concerned about the unsustainability of our long-term situation,” said Peter G. Peterson, a co-founder of the Blackstone Group and a prominent deficit critic.

In a quarterly report on the nation’s credit risk, Moody’s said there was an increasing probability of revising its outlook on its Aaa rating for the United States to negative from stable within the next two years if no action were taken.

That stops well short of actually reducing the rating. But even a small revision, if it comes, would probably rattle the financial markets and might even hamper America’s ability to borrow the money it needs to finance its deficit.

Moody’s has been rating United States government debt since 1917, and has always rated it Aaa.

Only once, in 1996, did the agency put some United States debt on review for possible downgrade — a much stronger step than a negative outlook. That was after Republicans refused to vote to increase the debt ceiling.

That debate is being repeated now in Washington, where the Obama administration is warning that the government could reach its legal borrowing limit within a few months. The administration is urging Congress to raise the debt ceiling to avoid a default.

Moody’s statement on Thursday was a repeat of a warning it had issued for the first time in December, after the Obama administration’s $858 billion deal with Congressional Republicans to extend the Bush-era tax cuts.

That compromise was likely to act as a stimulus on economic growth — indeed Moody’s raised its forecast for growth this year — but on balance it worsened the nation’s finances, the agency said.

Moody’s also cited the failure to adopt the ambitious measures proposed last year by President Obama’s bipartisan commission on debt reduction to shave $4 trillion from projected deficits over the coming decade.

“The U.S. is going in exactly the opposite direction from fiscal consolidation,” said Steven Hess, one of the authors of the Moody’s report. “In fact, they are going for more stimulus to the economy.”

Separately, S.& P. analysts, speaking at a conference for financial reporters in Paris, said that America’s fiscal condition had worsened in recent months.

“We can’t rule out the possibility that maybe one day we might have to change the outlook,” Carol Sirou, head of the agency’s French office, was quoted by Dow Jones Newswires as saying.

An S.& P. spokesman in New York confirmed the statement but backtracked slightly, saying that Ms. Sirou’s view had been nothing new. She was referring to comments made by another Standard & Poor’s official last year, John B. Chambers, chairman of the agency’s sovereign ratings committee, when he had warned that no triple-A rating was forever.

The spokesman, David Wargin, said it was “merely coincidental” that Standard & Poor’s pronounced on United States debt on the same day the Moody’s report came out.

In one of its own recent reports, S.& P. emphasized the “growing economic, fiscal, and protectionism risks” of the United States but said it was maintaining its strong AAA rating on the country.

The Moody’s report also raised worries about other countries, like Britain, Germany and France.

But though those countries were taking steps in various degree to improve their fiscal positions, the United States had so far failed to do so. “We therefore retain stable outlooks on these countries ratings, although there are questions about the willingness of the U.S. to take the necessary steps,” Moody’s said in its report.

It said “the medium-term trajectory for the deficit and debt ratios continues to present a worsening picture.”