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"Because... the path to addressing these (problems) is not clear to us, we have revised our outlook on the long-term rating to negative from stable," S&P said.
With a federal budget gap estimated at 10.8 percent of GDP by the end if this year, it said Washington will find it difficult to achieve its goal of halving the deficit by 2013.
"We think that the political process will outperform S&P expectations," said White House spokesman Jay Carney.
"The fact is, when the issues are important, history shows that both sides can come together and get things done."
The inference is that the S&P will not wait for the full election process to play itself... and that a plan must be in place before the (2012) presidential election to avoid a downgrade," said currency specialist Alan Ruskin of Deutsche Bank.
"As (economic) activity continues to pick up, large sovereign funding requirements will put upward pressure on interest rates, slowing the recovery of the private sector and lowering potential output," the WEO went on. "This could cause abrupt increases in interest rates in the United States (from especially low levels) that could destabilize global bond markets, with particularly deleterious effects on emerging market economies."
Originally posted by Arcade425
I read somewhere that the debt is actually around 117 trillion.
Mr Kotlikoff and Mr Moylan agree US national debt is much more than the official $US13.4 trillion number, but they disagree over how to add up the exact number.
Mr Kotlikoff says the debt is actually $US200 trillion.
Mr Moylan says the number is likely about $US60 trillion.