Board-Ansicht
Mix-Ansicht- Moody's warns on U.S. debt as Congress stalls - marsch, 22.05.2002, 19:13
Moody's warns on U.S. debt as Congress stalls
<table>
<table border="0" width="600">
<tr><td><font face="Arial"><font size=5>Moody's warns on U.S. debt as Congress stalls</font></font><div align="Justify">
May 21, 2002 05:49 PM ET
By Atiya Hussain
NEW YORK, May 21 (Reuters) - The United States' gilt-edged debt rating could go on review for possible downgrade if a political deadlock in Congress delays U.S. debt payments, ratings agency Moody's Investors Service said Tuesday.
The last time ratings agencies warned of mounting risk of default on U.S. public debt was during the 1996 budget crisis.
Even as the U.S. budget returns to deficits, Congress has refused to allow the government to borrow more money. The higher debt ceiling requested by U.S. President George W. Bush's administration has been held hostage to wrangling between Democrats and Republicans in the run-up to November's closely-contested congressional elections.
While Moody's said the stalemate does not immediately hurt U.S. credit worthiness, difficulties could arise after the end of June. A downgrade would mean U.S. debt is riskier to hold and would push up its interest-rate cost.
"Moody's believes that the most likely scenario is timely Congressional action prior to there being any problem with payments on debt obligations," the ratings agency said in a press release.
The government has enough money to last through June, but the U.S. Treasury has said it could have difficulty in meeting Social Security payments to pensioners in early July without an increase in the debt limit. As Congress stalls, the U.S. Treasury has been forced to dip into special funds to meet the government's monthly bills.
The Bush administration has asked for an increase of $750 billion in the debt ceiling, currently at $5.950 trillion of which $3.4 trillion is publicly held debt.
The Senate is controlled by Democrats, who argue that the Bush administration's $1.35 trillion, 10-year tax cut was skewed in favor of the wealthy and forced the government to tap Social Security surplus revenues. Republicans, who have control of the House, say the tax cuts helped buffer the impact of last year's economic slump and the Sept. 11 attacks on New York and Washington.
If Congress continues to stall and raises the risk of delays in payment, Moody's said it could put the United States debt on review for a possible downgrade to its gilt-edged Triple A debt rating.
A U.S. Treasury spokeswoman had no comment on Moody's announcement. U.S. Treasury prices held their modest bid with market participants saying the credit rating agency's statement came as no surprise.
"Moody's is just stating the obvious," said Stephen Stanley, senior financial economist, Greenwich Capital Markets, Greenwich, Connecticut. Ratings agencies made similar warnings during the budget crisis and government shutdown in late 1995 and early 1996, he said. But as the battle over funding the government drags on, market nerves may get frayed.
"I think it will be dealt with. I think it will occur at the last minute though and as a result I suspect that the markets are going to have to get pretty nervous before all is said and done," Stanley said.
Standard and Poor's, another major credit rating agency, was not immediately available for comment.
The debt ceiling last was raised in 1997 after a rancorous showdown that shuttered the government when a Republican-led Congress, bent on finding ways to undermine then-President Bill Clinton's popularity, pushed for tax cuts and clashed with Democrats wanting money for social programs.
But a booming economy filled the U.S. government's coffers to overflowing and a surprise surplus allowed it to start paying down its huge debt load. The U.S. budget has since slipped back into the red and forecasts are for a $106 billion budget gap this year.
Congress first adopted a debt limit of $11.5 billion in 1917 to give the administration some financing flexibility during World War I.
http://www.reuters.com/news_article...l?type=search&StoryID=991253
</div>
</td>
</tr>
</table>
<center>
<HR>
</center>
Thread gesperrtgesamter Thread:
