Two major international rating agencies said Monday that they will not immediately downgrade U.S. ratings after a congressional super committee failed to reach a deficit-cutting agreement.
The super committee announced Monday that the 12-member panel had failed to reach a deal to slash 1.2 trillion U.S. dollars of government spending over the next decade.
Standard & Poor’s, which cut the U.S. AAA rating in August and triggered a market meltdown, said the super committee’s inability to reach agreement did not merit another downgrade because the inaction will trigger an automatic spending cut of 1.2 trillion dollars.
“The Fiscal Committee’s inability to agree on fiscal measures that would stabilize the U.S. government debt as a share of GDP is consistent with our Aug. 5 decision to lower our rating to ‘AA-plus’,” the S&P said in a statement.
“However, we expect the caps on discretionary spending as laid out in the Budget Control Act of 2011 to remain in force,” the rating agency said. “If these limits are eased, downward pressure on the ratings could build.”