In the fiscal cliff negotiations, Obama held the line against entitlement reform, but the resulting deal could lead to downgrades by all three top debt ratings agencies later this year.
When Standard and Poor’s cut the United States debt rating last year, the agency issued a press release outlining the reasons behind their historic decision. Amid criticism of partisan brinksmanship there was a bottom line which had to do with entitlements,
The [2011 debt] plan envisions only minor policy changes on Medicare and little change in other entitlements, the containment of which we and most other independent observers regard as key to long-term fiscal sustainability.
In short, it wasn’t politics per se, it was the fact that politics seemed to be preventing a solution to the real, underlying problem. This week’s agreement to partially avert the fiscal cliff, while being judged a political victory for the President by some, does nothing to improve the situation.
Right on cue, Moody’s senior credit officer declared, “To support the triple-A rating, further measures to reduce deficit levels are needed.” In other words, we’re facing a second downgrade unless entitlement reform happens this year.
Full article: US Faces Credit Rating Downgrade By Three Top Firms This Year (Breitbart)