U.S. lawmakers need to come together as they did for a 1980s overhaul of Social Security and compromise on the medium-term consolidation of the country’s fiscal position, said John Chambers, chairman of Standard & Poor’s sovereign debt committee.
“This is a problem that has to be addressed by the full spectrum of political parties,” he said in an interview on Bloomberg Television.
S&P on Aug. 5 lowered the U.S.’s long-term rating one level to AA+ and kept the outlook at “negative,” saying it was becoming less confident in lawmakers’ ability to tackle the deficit. Moody’s Investors Service and Fitch Ratings affirmed their AAA credit ratings for the U.S. on Aug. 2, the day President Barack Obama signed a bill that ended a debt-ceiling impasse that had pushed the country to the edge of default.
“You’ve got a position here where the debt is on a rising share if you measure it against GDP,” Chambers said. “The plan that has been put forward and we think will be adopted gets you part of the way there but it doesn’t get you all the way there. And we don’t see in the next few years a consensus forming that will get you the rest of the way.”
Five governments have gotten their AAA ratings back after losing it, and “it’s taken them between nine and 18 years to do so,” he said. “Usually, when you lose a AAA rating you don’t get it back right away.”