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Moody’s Warns of Another U.S. Downgrade

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    Harvard Economist Jeffrey Miron on the risks of another downgrade.

  • Duration 3:02
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Credit rating agency Moody's it says America's rating will be downgraded again -- -- congress gets its act together on a budget and does it quickly.

-- house speaker John Boehner threw cold water on that prospect this afternoon by saying a deal is a long way off for some analysis now Harvard -- -- economists.

Jeffrey Miron welcome back to the show.

RA has to be here.

What do you make of this do you think that Moody's will end up downgrading -- yet again.

I suspect very well because I think it's going to be very hard for the two sides to -- to any -- -- any meaningful substantive agreements.

That -- another debt ceiling crisis that we -- -- little over a year ago there's is no well the cut the spending there's lots of opposition is tax increases and so we're gonna get a lot of stalemate.

Right here's what Moody's said the rating outlook assumes a relatively orderly process for the increase in -- statutory debt limit.

These people don't know from relatively order orderly processes you don't and in the last time we did hit the -- -- There's a lot of this throwing epithets yelled at me and I can't imagine it's gonna be orderly.

And of course of course not but there's -- -- this fundamental disagreement.

About what the right way forward as I -- it's useful to debate that because at least that's our conversation about what people care about.

But cents.

There's no well to cut the spending there's really no hope.

And the two sides just.

They're they're doing something -- -- sensible for them they're playing to their districts they're playing to their states.

But does that come from different -- and distanced different states they don't agree on what flat shape of government.

You know I I think party politics have something to do with it too but I did want -- to hear what John Boehner the speaker of the house had to say today.

He was asked if he's confident a budget deal can be done to avoid the fiscal.

Cliff.

-- -- -- -- Listen -- house is done its job.

-- both the sequester and on the looming tax sites that'll cost our economy some 700000.

Jobs.

The senate at some point have to act.

I don't both of these -- the president.

Where's the leadership.

Absent without leave.

What's the economic impact of another downgrade.

Well I don't think the economic -- about the impact of a downgrade in of itself.

Is a big deal I think everybody is more or less factored in the fact that there is this him.

Downgrade and -- background and everybody knows that the debt situation is completely unsustainable.

That problem is that.

Country after country after country has had been a situation like this and things seem to be going along okay until they weren't.

The crisis the big spike in interest rates the big defaults.

They happen without much warning we've seen that in Europe and many occasions.

And so.

We're gonna keep pretending that this is all gonna work out for -- you know until all of a sudden it's not working out and -- it's related disasters -- try to -- on sure -- be around the talked US when that does happen if it does happen Jeffrey thanks for coming on the show tonight always a pleasure to see you.

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