Neither party's deficit plan enough: S&P's Beers

NEW YORK Mon Apr 18, 2011 11:51am EDT

David Beers, Managing Director of Standard & Poor's sovereign and international public finance ratings group listens to reporters during a Reuters Investment Outlook Summit in London, June 9, 2010. REUTERS/Benjamin Beavan

David Beers, Managing Director of Standard & Poor's sovereign and international public finance ratings group listens to reporters during a Reuters Investment Outlook Summit in London, June 9, 2010.

Credit: Reuters/Benjamin Beavan

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NEW YORK (Reuters) - Neither President Barack Obama's nor Congressional Republicans' proposals would be enough to fix the government's $1.5 trillion deficit, Standard & Poor's global head of sovereign ratings David Beers said on Monday.

The tension between the White House and Congressman Paul Ryan and leading Republicans cast uncertainty over whether a credible deficit-reduction plan can be reached, Beers told Reuters Insider.

"Looking at the gulf between the parties, it has never been wider than now," Beers said. "It takes a lot of political will to bridge this gulf."

Earlier, the rating agency downgraded its credit outlook on the United States, raising the risk that the world's biggest economy could lose its coveted AAA-rating in two years. S&P cited a risk that policymakers may not reach a deal on a plan to cut its deficit, eroding its long-term credit-worthiness.

A rating downgrade could dramatically raise the U.S. government's borrowing cost.

S&P has downgraded the outlook of other major countries, most recently Britain, due to fiscal issues.

Beers said: "U.S. policymakers are still talking about it, but others are beginning to act."

If S&P were to take the next step in downgrading the U.S., it would lower its rating by a single notch to AA+ from the current AAA, according to Beers.

When asked about the future of the U.S. dollar, Beers said the greenback's status as the world's reserve currency remains "well entrenched" given Europe's own debt woes and Japan's burden to rebuild after last month's massive earthquake.

"The dollar is relatively attractive and would be for some more years to come," he said.

(Reporting by Richard Leong and Ryan Vlastelica, Editing by Chizu Nomiyama)

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Comments (2)
DrJJJJ wrote:
Our $14 TRILLION debt is more than 25% of TOTAL world debt-look it up if ya doubt! Doesn’t include at least that much more in IOUs for boomers, pensions, massive unfunded entitlements!! Anyone else think we have a moral obligation to change/cut spending?? A vision without a way to pay for it is very dangerous now! Vote only for those that are hoenst enough to cut spending dramatically and yes, we’ll need to raise taxes too-no choice! Tea anyone?

Apr 18, 2011 1:19pm EDT  --  Report as abuse
Sensibility wrote:
There is only one way to get our politicians to be serious about the country’s debt woes. We need to apply the pressure at the polls, by threatening to vote them all out (and following through) unless they stop carping and start doing something. I’ll go first. Mr. Obama, Mr. Reid, Mr. Boehner, we’re going to take you and your cohorts out. Get serious and do your jobs.

Apr 18, 2011 5:54pm EDT  --  Report as abuse
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