S&P Managing Director John Chambers: 1 in 3 Chance of a Future Credit Downgrade for U.S.
S&P Managing Director John Chambers spoke with Gretchen Carlson and Eric Bolling on Fox and Friends Monday morning, warning that the chances are one in three of a future possible credit downgrade for the United States. Chambers discussed the reasons leading Standard & Poor's to drop the country's AAA rating to AA+, saying that one of the deciding factors was
the political climate.
"[The politics] are not as strong as we had thought previously in comparison to other highly rated governments," said Chambers. "It was President Obama who characterized the political system as dysfunctional ... I think that's a good word."
The S&P official also cited the proximity the country got to encountering a "major cash flow problem."
A second aspect of the downgrade was the U.S.'s fiscal trajectory, according to Chambers. "Right now our debt to GDP [ratio] has doubled since the Great Depression. But we need to have a medium term fiscal consolidation plan to keep the confidence in markets ... and for that, you need policy makers who can take a proactive stance to ... put the finances on a sustainable footing," he said.
In a very pointed question, Eric Bolling - filling in for Brian Kilmeade on Monday's show - asked Chambers if his company would still have decided to downgrade the U.S. had Congress pass a Balanced Budget Amendment to the Constitution. Chambers somewhat skirted the question, saying only, "I think that what you would need is to have [a] confidence that would bind."
As fallout over the downgrade played out over the weekend, many Dems banned together to call the rating change a "Tea Party downgrade." Chambers told Gretchen and Eric he doesn't necessarily agree.
"I think there's lots of blame to go around, and what we need to come to in the U.S. is a way of forging consensus so that we can make the tough choices that lie ahead ... because the fiscal situation in the U.S. is not sustainable."