Federal gov't not alone, 5 states warned of downgrade

July 21, 2011

Though Minnesotans are finally with a budget, the days of their pristine credit rating by Moody’s are long gone, as the state has been AA-1 since 2003.

Only 15 states can claim AAA, the highest rating, but the debt ceiling poses a threat to their coveted ratings.

As reported by Politico, the credit rating agency Moody’s warned Tuesday that five states are in danger of losing their treasured AAA status. This comes as the partisan debt ceiling impasse persists and consequently, the absence of a deal threatens the states’ “heavy reliance on federal revenue.”

As an unfortunate reminder of the our nation’s vulnerable creditworthiness, a downgrade for Maryland, New Mexico, South Carolina, Tennessee and Virginia would expand the group of 35 already downgraded states that find it more expensive to borrow and to do business.

However, not all AAA states are sailing in the same boat, with Moody’s forecasting that a diverse group of 10 states remain “resilient to a one-notch downgrade” of federal debt.

The uncertainty created by the debt ceiling debate is crippling our economic recovery. Washington must come together to make the significant spending cuts that this climate and our $14.3 trillion debt demand.

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