Standard and Poor's threatened to downgrade the prized AAA credit rating
of the UNITED STATES unless the Obama administration and Congress find
a way to SLASH the federal budget deficit WITHIN TWO YEARS.
S&P, which assigns ratings to guide investors on the risks involved in
buying debt instruments, said the move signals at least a 1 in 3 chance
that it could eventually cut it long-term AAA rating on the U.S.
A downgrade, which would leave Germany and France with a higher rating,
would erode the status of the United States as the world's most powerful
economy and the dollar's role as the dominant global currency.
As investors demand higher returns for holding riskier U.S.debt, the
resulting rise in bond yields would crank up borrowing costs for consumers
and businesses. That would hurt the economy as it recovers from the worst
recession since World War II.
Sheila McKinney
