Yesterday, Moody's credit rating agency issued a press release with the following statement:
Budget negotiations during the 2013 Congressional legislative session will likely determine the direction of the US government's Aaa rating and negative outlook, says Moody's Investors Service in the report "Update of the Outlook for the US Government Debt Rating."
If those negotiations lead to specific policies that produce a stabilization and then downward trend in the ratio of federal debt to GDP over the medium term, the rating will likely be affirmed and the outlook returned to stable, says Moody's.
If those negotiations fail to produce such policies, however, Moody's would expect to lower the rating, probably to Aa1.
Additional information can be found at: http://www.moodys.com/research/Moodys-issues-update-on-the-outlook-for-the-US-governments--PR_254944
In response to Moody's announcement Governor Walker released the following statement:
Illinois recently received a credit downgrade, which our nation is now potentially facing. Wisconsin is on a different path--just last year Moody's rated our state budget credit positive.
If political leaders continue to kick the can down the road, raise taxes, and ignore fiscal realities the great people of our nation will face the consequences. Decisive leadership is needed in Washington to reduce government spending and bring debt in line with GDP to avoid credit downgrades and future negative outlooks.
Wisconsin balanced a $3.6 billion budget deficit without raising taxes, reducing services, cutting Medicaid, or engaging in any massive public employee layoffs. We enacted long-term structural reforms, which led to another bond house giving our current budget a "credit positive" outlook.