David Beers on the impact of Washington budget proposals on the U.S.'s Triple-A rating:
"The question that we have is, given where we are in the political calendar, given the very ambitious timeframe that the administration has outlined to reach agreement between Congress and the administration over the next few months, we just think that it is somewhat questionable that they are going to get a deal that is sufficient in its scope of deficit reduction and when you get down to the details whether it will be seen by the market, let alone us, as being credible."
"We think this process of getting to significant fiscal consolidation in the United States is a multi-year project…Hard choices have to be made. We just think it is highly unlikely that whatever agreement that Congress and the administration might make over the next couple of months, is going to be sufficient to turn the tide on the upward debt trajectory of the U.S."
On when there could be a downgrade of U.S. credit rating:
"Apart from the envelope that a rating outlook addresses, I can't give the exact dates at this point. Because none of us knows how the process the administration is talking about is going to play itself out. We will have to see."
On whether either Republican or Democratic plans are up to the task of fixing U.S. debt problem:
"We're not saying that no agreement is possible. We're just unsure as to the timeframe and whether it will be seen as credible, not just by us, but by the broader marketplace."
"We do not take a position on what Congress and the administration should do. We think that the $4 trillion target is a worthwhile goal to work on. If you look at the medium to longer-term, that is not enough to ultimately halt the rising trajectory of U.S. debt, but it is a useful starting point."
"There is a very large gulf between the [Democratic and Republican] proposals about how they want to get there. Ultimately, we may well see this fleshed out in the coming Congressional and Presidential election campaigns, but we would just highlight there is a big gulf."
On what S&P might do if things continue on their current trajectory:
"Other things being equal, the next step would be to lower the rating. The other possibility is, if things move in a direction of some comprehensive fiscal consolidation program that we think is sufficiently large in scope and is actually likely to be implemented, the rating could be affirmed."
"An outlook change does not necessarily lead to a downgrade. That is why its definition is at least a one in three chance. In judging those chances, it is judging the process that we have discussed and how it plays out."
On timing of the S&P report:
"Our rating is our rating. It is up to the guys in Washington to decide what they want to do with our opinion. We're not advocating that they do anything at all."
"We're just talking about the credit consequences of continuing to allow present fiscal trends to continue indefinitely. As I said before, we do not have a policy position about what the U.S. government should do. Our job is to offer our opinion about what the credit consequences of policy are."
Source - Bloomberg