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U.S. faces downgrade this year despite rosy budget projections, Moody's warns
mrearlygold
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U.S. faces downgrade this year despite rosy budget projections, Moody's warns
May 20, 2013
Debt loads must be addressed, says ratings agency
U.S. policy makers must address debt loads projected to rise later this decade to avoid a 2013 downgrade, even as the latest budget projections are "credit positive," according to Moody's Investors Service.
The U.S. budget deficit will drop to $378 billion in 2015 from a record $1.4 trillion in 2009, according Congressional Budget Office data. The federal government will post an $642 billion deficit this year, the first time in five years that the shortfall has been less than $1 trillion. Moody's said Sept. 11 that the U.S.'s top Aaa rating would likely be cut to Aa1 if an agreement on the debt ratio isn't reached.
"The fact that it showed much lower debt levels going forward, we view as a positive development," Steven Hess, senior vice-president at Moody's and based in New York, said of the CBO forecast. "More needs to be done on the policy front to address this rising debt ratio."
While projections from the non-partisan budget office forecast the ratio of U.S. debt to gross-domestic-product declining to less than 71 percent by fiscal year 2018, the CBO forecasts the measure will increase "thereafter, pointing to the uncertain long-term outlook if reform of entitlement programs does not take place at some point," Moody's said.
Linky-Dinky
May 20, 2013
Debt loads must be addressed, says ratings agency
U.S. policy makers must address debt loads projected to rise later this decade to avoid a 2013 downgrade, even as the latest budget projections are "credit positive," according to Moody's Investors Service.
The U.S. budget deficit will drop to $378 billion in 2015 from a record $1.4 trillion in 2009, according Congressional Budget Office data. The federal government will post an $642 billion deficit this year, the first time in five years that the shortfall has been less than $1 trillion. Moody's said Sept. 11 that the U.S.'s top Aaa rating would likely be cut to Aa1 if an agreement on the debt ratio isn't reached.
"The fact that it showed much lower debt levels going forward, we view as a positive development," Steven Hess, senior vice-president at Moody's and based in New York, said of the CBO forecast. "More needs to be done on the policy front to address this rising debt ratio."
While projections from the non-partisan budget office forecast the ratio of U.S. debt to gross-domestic-product declining to less than 71 percent by fiscal year 2018, the CBO forecasts the measure will increase "thereafter, pointing to the uncertain long-term outlook if reform of entitlement programs does not take place at some point," Moody's said.
Linky-Dinky
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