Newsmax.com
July 18, 2011
Egan-Jones Ratings Co. cut its rating on the U.S. by one step to AA+ from AAA,
citing the high level of debt outstanding relative to other countries and
concern that politicians may fail to reduce spending.
“The major factor driving credit quality is the relatively high level of debt
and the difficulty in significantly cutting spending,” the firm said July 16 in
a report. Egan-Jones placed the U.S. on negative watch on March 1.
Republicans are using talks to increase the $14.3 trillion debt-ceiling to
press for cuts in spending. Treasury Secretary Timothy F. Geithner has said the
government, which reached its borrowing limit on May 16, will run out of options
to prevent a default on Aug. 2. The most likely outcome of the negotiations is
that the federal government will fail to reduce its debt to gross domestic
product “in any sort of meaningful fashion,” said Sean Egan, president of
Egan-Jones in Haverford, Pennsylvania.
“We’ll muddle along, we won’t decrease the debt to GDP,” Egan said today on
Bloomberg Television’s “Street Smart” with Carol Massar. “Then we’ll be faced
with the crushing blow of the baby boomers retiring.”
Moody’s Investors Service and Standard & Poor’s have put the U.S. debt
rating on review for downgrade.
--Editors: Paul Cox, Dave Liedtka
To contact the reporter on this story: John Detrixhe in New York at
jdetrixhe1@bloomberg.net
To contact the editor responsible for this story: Dave Liedtka at
dliedtka@bloomberg.net
Read more on Newsmax.com: Egan-Jones
Cuts U.S. Rating to AA+ on Spending-Cut Concern
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