Cantor: Standard and Poor's warning is a 'wake-up call' on debt

Update at 12:14 p.m. ET: House Majority Leader Eric Cantor says S&P's warning "sent a wake-up call to those in Washington asking Congress to blindly increase the debt limit." He said it made clear that the debt limit increase proposed by the Obama administration "must be accompanied by meaningful fiscal reforms that immediately reduce federal spending and stop our nation from digging itself further into debt. "

Cantor, the No. 2 Republican in the House, says GOP members "will only move forward on the President's request to increase the debt limit if it is accompanied by serious reforms that immediately reduce federal spending and end the culture of debt in Washington."

Update at 10:17 a.m.ET: The AP quotes Mary Miller, assistant secretary for financial markets, as saying S&P "underestimates the ability of America's leaders to come together to address the difficult fiscal challenges facing the nation."

Update at 10:16 a.m.ET:  S&P says it has little confidence that the White House and Congress will agree on a deficit-reduction plan before the fall 2012 elections, the AP reports. By that time, the measures won't go into effect until the fiscal year 2014.

"We see the path to agreement as challenging because the gap between the parties remains wide," said Standard & Poor's credit analyst Nikola G. Swann.

Update at 9:53 a.m.ET: Reuters says the S&P report sent the stock market down at the opening with the Dow dropping 175 points.

Earlier post: Standard & Poor's affirms Triple A sovereign credit rating for the United Statestoday but revises its outlook onthe long-term rating from stable to negative, The Wall Street Journal's MarketBeat blog reports today.

The blog's Dave Kansas writes that the S&P's action "feels like a little shot across the bow at Washington, where politicians continue to dicker and dither while the debt and deficit rise and the debt ceiling debate nears."

After rah-rahing the overall strength of the U.S. economy, the S&P says:

We believe there is a material risk that U.S. policymakers might not reach an agreement on how to address medium- and long-term budgetary challenges by 2013; if an agreement is not reached and meaningful implementation is not begun by then, this would in our view render the U.S. fiscal profile meaningfully weaker than that of peer 'AAA' sovereigns.

Gold, anyone?

.div-wrapper

View the Original article