AAA Ratings: How Important Are They to the US Economy?

Friday, July 29, 2011

With the chances of Congress reaching an agreement on raising the debt ceiling uncertain, politicians, economists, and members of the business community continue to fear a "doomsday scenario" in which the United States defaults on its debt on August 2. Among the economic catastrophes predicted to occur is the possibility that the U.S. will see its credit downgraded, losing its AAA credit rating for what is being said to be the first time in history. But what exactly is a AAA credit rating, and is it really so important for the nation to have one? 

Felix Salmon, finance blogger at Reuters, advocates for ending the AAA credit rating. Credit assessment field consultant Marc Joffe, says that the U.S. has defaulted on its debt before, and doesn't understand the political pressure to say that it has not. He wrote about this in his blog post, "Correction: The U.S. Has Defaulted Before and It Can Default Again."

Guests:

Marc Joffe

Comments [2]

listener

If in "ten to 20 years..based on CBO forecasts our debt ratios..will be off the map" than the Ryan Medicare plan and "cut, cap and balance" introduced by the Republican Congress were the only responsible economic plans offered and both were defamed, derided and denied by the President and his party.
It seems all the serious attempts to deal with this ruinous debt are coming from the Republican side and absolutely nothing is being offered by the President who created this crisis. There is a great attempt in the media to turn this narrative on its head but the truth of the situation is clear to those paying attention.

Jul. 29 2011 04:16 PM
amalgam from NYC by day, NJ by night

Sure, the US would survive a default...we just would be knocked down a few pegs in the global economy, pay MORE in debt payments, etc.

In essence, we WILL be forced to deal with and plan for our long-term debt and budget issues in short order, but we MUST deal with the immediate issue of raising the debt ceiling and the flagging economy.

Moreover, there is no reason to state that we can't plan for long-term budgetary/structural matter NOW at the same time that we help the US economy. The hybrid approach is often the best one, why do many deny this?

Jul. 29 2011 11:52 AM

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