Obama’s Policies Could Cause A Second U.S. Credit Downgrade

Barack Obama became the first president to preside over a downgrade of the U.S. credit rating. Now, he may cause a second.

Fitch Ratings has warned the United States it may downgrade the U.S. credit rating in 2013 if the nation does not take steps to balance its exploding national deficit. Without a “credible plan” to cut the deficit, the ratings agency warned in a statement, “the sovereign rating will likely be lowered by the end of 2013.”

“Federal debt will rise in the absence of expenditure and tax reforms that would address the challenges of rising health and social security spending as the population ages.”

Last month Fitch changed the U.S. outlook from “stable” to “negative.” Moody’s Investors Service also warned of a looming downgrade because of the nation’s massive debt load.

In August Standard & Poor’s downgraded the U.S. credit rating from its highest level, AAA, to the next lower rating, AA+. S&P warned this new status could last until at least 2029, even if a perfect plan is implemented — and one is not on the horizon.

Since Fitch promised not to act until 2013, the president will be spared any embarrassing situation on the campaign trail. But even if the nation turns Obama out of office, his policies may cause damage that lasts for a generation — and his Republican successor could be blamed.

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