S&P affirms reduced rating of long-term US debt
Saturday, June 9, 2012
WASHINGTON (AP) — The rating agency that downgraded the U.S. government's long-term credit rating last year has reiterated its assessment and its negative outlook. It says U.S. political leaders aren't addressing the federal debt burden.
Standard & Poor's said Friday that it's keeping its rating of U.S. long-term debt at "AA+." It cut the rating in August after a battle in Congress over whether to raise the nation's borrowing limit. Previously, the U.S. government had always received a "AAA" rating, reserved for the most credit-worthy borrowers.
At the time, S&P said it lowered the credit rating in part because it had lost some confidence in the U.S. political system. On Friday, it made clear that hasn't changed.
"We believe that political polarization has increased in recent years," the S&P said, citing the failure of last year's deficit-reduction "supercommittee" to reach agreement.
S&P said it expects the government's debt to rise, as a percent of the economy, from 77 percent in 2011 to 83 percent in 2012 and 87 percent by 2016. That's below the S&P's forecast last August, when it downgraded the United States.
Still, S&P says the United States has an "adaptable and resilient" economy, and many governments hold dollar reserves, a sign of confidence in the currency.
Last year's rating cut contributed to a stock market plunge and caused a sharp fall in U.S. consumer and business confidence.
Yet despite S&P's concerns about U.S. debt levels, investors seeking safety have been pouring money into Treasurys and driving down their interest rates. The yield on the 10-year Treasury note, at 1.64 percent, is near a record low.
John Piecuch, a spokesman for S&P, said Friday that the agency revisits its credit ratings every year. Friday's announcement came after "a routine review," he said.
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