Fitch warns of US downgrade over deficit


Posted at Nov 29 2011 07:45 AM | Updated as of Nov 29 2011 09:36 PM

NEW YORK - Fitch Ratings on Monday warned it may cut the United States' AAA rating if policymakers fail to agree in 2013 on a plan to reduce the country's ballooning budget deficits.

The ratings agency revised to negative from stable the outlook on the U.S. credit rating after a special congressional committee failed last week to agree on at least $1.2 trillion in deficit-reduction measures.

"The negative outlook reflects Fitch's declining confidence that timely fiscal measures necessary to place U.S. public finances on a sustainable path and secure the U.S. AAA sovereign rating will be forthcoming," the ratings agency said in a statement.

The so-called "supercommittee" of six Democrats and six Republicans last week said they couldn't agree by their deadline on deficit reduction, setting in motion automatic cuts that should result in lowering the deficit by $1.2 trillion over 10 years. The cuts are designed to be split evenly between domestic and military programs.