In the wake of the supercommittee’s failure to reach a deal, Fitch Ratings, one of the three major credit ratings agencies, has revised its outlook on U.S. debt to negative. At least for now, the agency is standing by its AAA rating of long-term U.S. treasury bonds, but David Riley, head of Sovereign Ratings at Fitch, told CBS News there is a good chance (about 60 percent) that could change over the next couple of years. A lot will be riding on the 2012 elections:
“There clearly is a consensus that the current situation is not sustainable,” Riley said.
He said they expect little action on deficit reduction before the elections next fall.
“Elections sometimes are a good way of focusing the mind and highlighting the tough choices that have to be made,” Riley said. “We think there is a reasonable chance that the election and the new administration and congress that comes into office will have the mandate to take those tough decisions.”
Standard and Poor’s already downgraded the U.S. credit rating following the often testy debt-ceiling negotiations this past summer. Moody’s, meanwhile, has yet to weigh in on the supercommittee’s failure, but the agency did slap a negative outlook on U.S. debt in the wake of those earlier debt talks. Analysts at Merrill Lynch have predicted “at least” one additional downgrade before the end of the year.