Standard and Poor’s held its debt rating for the United States unchanged at AA+ on Friday, nearly three years after dealing Washington a historic cut to its top-flight grade.
S&P said the country’s “polarized policymaking environment and high general government debt and budget deficits” prevent a return to AAA status.
“A higher degree of political brinksmanship in recent years — that complicates the policy decision-making process, resulting in a somewhat weaker ability to enact reform — constrains the ratings,” S&P said.
It also pointed to the doubling of government debt since 2007, and its expectations that while US borrowing have slowed significantly with an improved budget picture, debt growth is likely to pick up again at the end of this decade.
At the same time, S&P said the current ranking holds up given the resilience of the US economy, policy flexibility, and the unique status of the US dollar as the world’s leading reserve currency.
The agency praised US actions to counter the 2008-2009 recession and to rebuild the economy and financial system since then.
It also said that US economic growth is stronger than its peers, forecasting a 2.5-3.5 percent annual rate for the next several years.
But it sees the net government debt burden, around 80 percent at the moment, holding through 2017 and then worsening, without major economic policy initiatives.
S&P dealt the United States its first-ever cut to its AAA rating in August 2011 after a political impasse nearly brought government to a halt, and then extended through a series of budget and borrowing crises, including one that partially shut down the government last October.
Even if the warring Democratic and Republican parties finally bridged some differences last December to approve a budget, S&P said, “more ambitious steps to stem rising medium-term fiscal pressures do not appear to be in the offing.”
“Although both parties agree on the need to lower the government debt burden, the discussions about how this might be achieved are acrimonious.”
S&P was not optimistic that situation would change much through the November 2014 congressional elections to the November 2016 presidential vote.