US Budget Governance “Less Stable”

Share On Facebook

Ratings agency Standard and Poor’s has called for the US government to address its budget problems following a temporary agreement over the “fiscal cliff”.

Arguing that “Washington’s governance and policymaking had become less stable” Standard and Poor’s cited recent events as demonstrating that current budget governance was “less stable, less effective and less predictable”.

The deal reached by Republican and Democrat lawmakers avoided a potential $536bn of tax rises and $109bn of spending cuts, but saw a lower increase in tax revenues sought by the Democrats and a postponement of when the spending cuts sought by the Republicans would be agreed upon.

Previous disagreement in 2011 between the Democrats and the Republicans led to S&P to downgrade the US’s credit rating from AAA to AA+, following a heated stalemate between the Republican controlled House of Representatives and the Democrat controlled Senate about raising the government’s ‘debt ceiling’.

Standard and Poor’s intervention followed an earlier statement by rival Ratings agency Moody’s, which currently put’s the country on a negative outlook, that the US needed to take additional measures to resolve the country’s increasing debt.

Before the “fiscal cliff” agreement Moody’s had called for members of both houses to seek an agreement which would “produce a stabilisation and then a downward trend in the ratio of federal debt to GDP over the medium term”.

Commenting on the current division between the two houses of congress Erskine Bowles, who headed a bipartisan debt commission in 2010, said that the political parties “didn’t do any of the tough stuff” then and that the US has “taken two steps now, but those two steps aren’t enough to put our fiscal house in order”.

CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).

This area of the ADVFN.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ADVFN Plc. ADVFN Plc does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ADVFN.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ADVFN.COM and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Authors may or may not have positions in stocks that they are discussing but it should be considered very likely that their opinions are aligned with their trading and that they hold positions in companies, forex, commodities and other instruments they discuss.

Leave A Reply

 
Do you want to write for our Newspaper? Get in touch: newspaper@advfn.com

By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions

P: V: D:20191122 12:43:58