U.S. expecting debt downgrade: ABC News
The U.S. government expects its debt to be downgraded by credit ratings agency Standard & Poor’s from its current triple-A rating and is preparing for the event, ABC News said on Friday.
ABC cited an unnamed government official as its source and said it was uncertain whether the rating would drop from triple-A to AA or to AA.
The report said the main reasons likely to be cited for a U.S. downgrade by S&P included political confusion surrounding the process of hiking the debt limit and doubt that agreement would be reached on more deficit reductions.
A downgrade to AA or AA+ will have marginal effect on borrowing rates for the time being. The uncertainty surrounding the global economy will continue to drive money into Treasuries. During a recovery, however, when investors will be seeking out bonds for liquidity and safe haven purposes, the difference between AA and AAA will be felt. Oh, and the difference is paid by taxpayers - Republican or Democrat.
The worst part is that since the immediate effect will be negligible, the economic saboteurs on the right will run around saying they were correct all along. And by the time the piper shows up to be paid, they will be long gone to K Street.