Bank of America predicts U.S.’s credit could be downgraded again
Posted on October 25, 2011
Bank of America issued a stark prediction last Friday, asserting that the nation’s credit rating could see another downgrade before the new year.
BofA Merrill stated they do not expect substantial progress from the congressional super committee charged with finding large reductions in government spending.
This comes after Standard and Poor’s downgraded the U.S. from a AAA to AA+ in early August, a move that drew rebuke from politicians and pundits alike and removed much credibility of any touted economic recovery since the recession began in 2008.
Moody’s, another major credit rating company, said back in August that the U.S. could see a downgrade from their institution before 2013 if it observes “(1) any weakening of fiscal discipline between now and then or (2) a significant deterioration in the economic outlook resulting in adverse fiscal implications that are not offset.”
The bi-partisan congressional super committee was formed as a means explore reductions in federal spending, but has been having a hard time agreeing on cuts. One huge drain on federal capital is our on-going foreign wars and large defense contracting programs, which total more than 700 billion annually.
President Barack Obama stated last week that combat troops in Iraq would all by pulled out by the end of December, which will surely bring a huge reduction in Department of Defense spending and could bolster the economy.
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