Jan 17 () - (The following statement was released by the rating agency)
Jan 17 - While the fiscal cliff has been temporarily averted, uncertainty
about a possible federal deficit reduction plan creates a lack of clarity for
public finance, according to a new Fitch Ratings report.
The majority of U.S. public finance sector outlooks for 2013 are stable. Fitch
anticipates that the majority of rating actions in 2013 will be affirmations.
'The last minute resolution of the fiscal cliff lessens concerns about the U.S.
economy falling into recession and removes the economic risk of a large-scale
federal personal income tax increase. But fiscal, economic and regulatory
uncertainties continue to be an immediate threat to the 2013 public finance
outlooks,' said Rich Raphael, Managing Director, U.S. Public Finance Group.
'If the automatic spending cuts now scheduled for March 1 take effect, Fitch
does not expect a near-term impact on ratings. However, a significant multi-year
federal deficit reduction plan poses a more formidable risk to the economies and
budgets of states, particularly if cuts to large spending programs like Medicaid
are included. Local governments could bear the brunt of federal cuts to states
if the states reduce aid to the locals.'
Hospitals will be challenged by the potential cuts, since Medicare is a key
target for spending reductions. Medicare cuts, coupled with reduced
reimbursement expected from healthcare reform, will likely threaten operating
For more information, a special report titled '2013 US Public Finance Outlooks'
is available on the Fitch Ratings web site at www.fitchratings.com.