U.S. Officials Still Urge Action After Fitch Report

From The Wall Street Journal

By JEFFREY SPARSHOTT And COREY BOLES

WASHINGTON—U.S. officials Tuesday, speaking after Fitch Ratings affirmed the country's top-notch credit rating, said national leaders must still make critical progress on cutting budget deficits.

"It doesn't change the fact that we need fundamental change to start getting our debt and deficit under control if we want our economy to grow and create more American jobs," said Michael Steel, a spokesman for House Speaker John Boehner (R., Ohio.). "All year long, Republicans have been offering plans to do just that."

Fitch earlier Tuesday affirmed its triple-A credit rating on the U.S., but cautioned that could change depending on developments in Washington and the broader economy. The announcement follows the Aug. 5 downgrade by Standard & Poor's Ratings Services, which cut the U.S. to double-A-plus. Moody's Investors Service affirmed its triple-A rating on the U.S. earlier this month but maintained a negative watch.

The Treasury Department called on Congress to act on additional deficit reduction. "Today's report underscores the importance of Congress taking additional actions to address our long-term fiscal challenges," said Treasury Department spokesman Anthony Coley. "The Treasury Department continues to believe that Treasury securities are AAA investments."

While the Obama administration and Republicans in Congress agree that budget deficits have become unsustainable, they haven't agreed on specific cuts that will bring spending and revenue into better balance. S&P cited the prolonged and near-disastrous conclusion of debt-ceiling talks in its decision to downgrade, and questioned Washington's ability to function.

It was the first time in modern history that one of the three main ratings firms had stripped the U.S. of its coveted triple-A rating, a move that sent markets tumbling world-wide.

Fitch said the outlook on the long-term rating is stable, though it cautioned that it would review its projections following deliberations of a congressional "super committee" charged with finding at least $1.2 trillion in deficit reduction over the next decade.

"While this latest rating was a bit of good news, it doesn't overshadow the fact that we must get our debt under control, a Senate Republican aide said, adding future spending cuts must include both entitlement and discretionary federal spending.

House Minority Leader Nancy Pelosi (D., Calif.) declined to comment.

Fitch said that if its forecast for U.S. debt rises either due to a weaker-than-expected economic recovery or the failure of the congressional committee to reach agreement on at least $1.2 trillion of deficit-reduction measures, it would likely revise the country's rating outlook to negative from stable.

"Less likely would be a one-notch downgrade," Fitch said.

The Joint Select Committee on Deficit Reduction was formed as part of a broader deal to raise the U.S. debt limit and pare deficits.

Write to Jeffrey Sparshott at jeffrey.sparshott@dowjones.com and Corey Boles atcorey.boles@dowjones.com