New Power Brokers Enter the Debt-Ceiling Fight
Although a debt ceiling suspension cedes a powerful bargaining chip in budget negotiations, Washington power brokers still hold plenty of leverage.
"Avoiding a government 'shutdown' requires Congress to pass a continuing resolution by March 27 and the deferred spending sequester comes into effect on March 1," Fitch Ratings noted.
While failure to meet those deadlines wouldn't prompt a downgrade, it might indicate that "it would undermine confidence in the prospects for reaching agreement this year on a credible deficit-reduction plan necessary to forestall a downgrade of the U.S. rating," the agency said.
An imminent downgrade of the government's AAA rating is off the table in the wake of a three-month suspension of the debt ceiling agreed on Friday, Fitch said.The move pushes back the prospect of a destabilizing debt downgrade and may be cause for some investor cheer as the S&P 500 and Dow Jones Industrial Average open the year with a rally. Still, Fitch Ratings, Moody's and S&P could spoil the party in 2013 if Congress and the Obama administration can't broker a budget deal in the coming months. For more on ratings agencies, see why Moody's sees risks in the Fed's low interest rate policies. Follow @agara2004 -- Written by Antoine Gara in New York
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