Last  year's debacle over raising the debt ceiling was torture enough and  threatening enough that Standard and Poor's downgraded the US of A's  credit rating. Now, facing the fiscal cliff, America's sovereign credit  rating is once more on the line with the other 2 major credit rating  agencies, Moody's and Fitch.

Reportedly,  both agencies have adopted a wait-and-see approach as to how reaction  will be in the latest fiscal battle between the White House and  Congress. Doing nothing or not reacting adequately could lead both to  join with Standard and Poor's and cut the nation's credit rating.

Wall  Street ratings agencies are skeptical of the resolve of political  leaders to tame the nation’s debts, and are raising the likelihood that  at least one of the three top agencies will add to the turmoil in  financial markets at the end of the year by further downgrading the U.S.  credit rating.

All three agencies have said since Election Day  that they are following closely the negotiations over the “fiscal  cliff,” and whether the U.S. retains its top AAA rating from two out of  the three — or gets downgraded further — depends on the White House and  congressional leaders pushing through a major budget deal with $4  trillion or more in savings to stabilize the debt.

President  Obama and House Speaker John A. Boehner, Ohio Republican, have pledged  to work toward forging such a deal, but they remain far apart on the mix  of tax increases and spending reforms needed to get there. Mr. Obama  insists he has a mandate to allow the tax rate on top earners to revert  to 1990s levels at the end of the year, while Mr. Boehner says  conservative Republicans will defeat higher tax rates in the House. The  two sides also are severely divided on how to reform Medicare, Medicaid  and other entitlement programs to bring down costs as the nation’s  population ages.

Any ratings cut by a second Wall Street agency  after last year’s first-ever downgrade of the U.S. rating by Standard  & Poor’s Corp. has the potential to disrupt financial markets even  more than the first downgrade, analysts say, because it would render  U.S. Treasury securities ineligible to be included in some investment  funds that are required to maintain an average AAA rating on their  holdings.

Avoiding such a disruptive ratings cut will not be  easy, as the credit agencies are setting high hurdles for Congress and  the administration. The second-largest agency, Moody’s Investors  Service, for example, says it will downgrade the U.S. rating if Congress  and the president “punt” the year-end deadline for imposing $500  billion in tax increases and spending cuts into next year ­— unless in  extending the deadline they also agree to finish work next year on a  broader budget deal to stabilize the debt.

Moody’s and Fitch  Ratings warn that anything short of a major budget accord will lead to a  downgrade. But perhaps the most skeptical of all is S&P, which is  threatening to further downgrade the U.S. from its AA+ level if Congress  and the administration even engage in the kind of cliffhanger  politicking they did last year when they came close to driving the  Treasury into default on the debt. Observers expect another round of  dramatic ultimatums and grandstanding as the deadline approaches.

The uncompromising positions taken by both parties at the start of  negotiations have unnerved Wall Street investors, with the stock market  taking another dive Wednesday on fears that the warring parties will  drive the economy over the fiscal cliff early next year. The Dow Jones  industrial average lost another 185.23 points, or 1.45 percent, and  ended at 12,570.95.

The financial turmoil will only deepen if  the U.S. rating is downgraded again, analysts say. Last year’s downgrade  by S&P precipitated a drop of more than 600 points in the Dow.

http://washingtontimes.com/news/2012/nov/14/credit-ratings-agencies-warn-against-political-pos/

From  the Cornfield, the nation's economy can not afford a hit that another  downgrade would cause. It is imperative that our elected officials in  Congress and the President to work together and find a solution.