Credit rating agency Egan-Jones has cut the United States' top credit ranking, citing concerns over the country's high debt load and the difficulty the government faces in significantly reducing spending.Egan Jones isn't one of the "big three" of credit ratings (Standard and Poors, Moodies and Fitch), but they are all looking at the same economic facts. This downgrade is notable in that it is based on the ginormous debt, and the decreasing likelihood that the US will find the will pay in the long run, rather than the immediate prospect of a technical default in the short term caused by the failure of the legislative branch and the administration to find a political solution to the immediate problem of the debt ceiling. The other credit rating agencies have also sent signals that they may downgrade the US even if the debt ceiling is raised, if the deal to raise it does not deal adequately with the long term problem of the debt.
The agency said the action, which cut U.S. sovereign debt to the second-highest rating, was not based on fears over the country not raising its debt ceiling.
Instead, the cut is due the U.S. debt load standing at more than 100 percent of its gross domestic product. This compares with Canada, for example, which has a debt-to-GDP ratio of 35 percent, Egan-Jones said in a report sent on Saturday.
Lawmakers in Washington are seeking to agree on spending cuts before raising the country's debt ceiling, with five days remaining before President Obama's deadline for a deal...
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