The rating agency Standard & Poor's took a lot of unjustified criticism from the Obama administration recently when S&P downgraded the United States' credit rating from the top level, AAA, to AA-plus for the first time in our nation's history.
But S&P and the other major rating agencies, Moody's Investors Service and Fitch Ratings, had warned of a downgrade if the United States did not take serious steps to reduce deficits. So the administration should not have been surprised that S&P reduced our credit rating after Congress failed to pass the necessary level of spending cuts.
So far, Moody's and Fitch have left their ratings at AAA, but Moody's adds a negative outlook to its rating. And now Fitch says it may lower its outlook to negative if Washington doesn't do enough in the coming months to reduce our trillion-dollar-plus annual deficits or if the economy weakens further.
Fitch said a negative outlook means it most likely would formally downgrade the United States' debt rating within two years.
That is alarming because it could force interest rates up for consumers and businesses, and reduce economic activity at a time when we desperately need it. It could also force the United States to pay even more than the hundreds of billions of dollars that we are already paying in interest on the $14.6 trillion national debt.
The downgrading of our rating by S&P was not an isolated action. S&P's concern about U.S. debt is shared by the other major credit-rating agencies - and, more importantly, by the American people.
It is high time to get serious about cutting the irresponsible federal spending that created that debt.