Entries in Super Committee (3)


Fitch Cuts US Outlook from Stable to Negative

Comstock/Thinkstock(NEW YORK) -- There are new doubts about the ability of the United States to get its financial house in order. After the market closed Monday, Fitch Ratings announced it has revised its outlook on the U.S. credit rating from “stable” to “negative.”

“The Negative Outlook reflects Fitch’s declining confidence that timely fiscal measures necessary to place U.S. public finances on a sustainable path and secure the U.S. ‘AAA’ sovereign rating will be forthcoming,” Fitch said in a statement.

Fitch said blame rests with the so-called congressional supercommittee that failed to agree on spending cuts and tax increases to help reduce the nation’s deficit.

“By postponing the difficult decisions on tax and spending until after forthcoming Congressional and Presidential elections, the scale and pace of required deficit reduction will consequently be greater.”

Fitch maintained its AAA rating on U.S. debt and indicated the risks of a downgrade appear minimal. The other credit ratings agencies, Moody’s and Standard and Poor’s, also left their AAA ratings unchanged.

Copyright 2011 ABC News Radio


Stocks Close Lower as Supercommittee Stalls

Hemera Technologies/Thinkstock(NEW YORK) -- Stocks declined on Monday over two percent following reports that the Congressional Joint Select Committee -- the so-called supercommittee -- has failed to reach an agreement on spending cuts and tax increases to trim the deficit by the Nov. 23 deadline.

At the end of trading, the Dow Jones industrial average dropped over 248 points, or 2.1 percent, to 11,547 and the Nasdaq was down 1.9 percent to 2,523.

In addition to the European debt crisis, investors are concerned that the failure to reach an agreement may lead to another credit downgrade for U.S. bonds and thus higher borrowing costs for the government.

Without a deficit reduction agreement, $1.2 trillion in "sequester caps," or automatic cuts, will be implemented. The cuts will affect a range of programs from Medicare and Medicaid to the Pentagon.

Eugene Stone, PNC chief investment strategist, said though investors had "low expectations" for the supercommittee, its likely failure is adding to the woes in the market.

Stone said investors already know how they stand on the 2012 election, which they believe will have a greater influence on the management of the deficit than the supercommittee.

"That's part of the reason why we won't likely come to a deal. We'll make it an election issue. Some of these decisions come down to underlying philosophies," he said.

Stone said a stronger driver for financial markets is concern over the debt crisis on the other side of the Atlantic -- in the eurozone.

Back in the U.S., investors expressed concern that Congress' inability to lower U.S. debt and improve the country's credit standing could harm the economy -- reminiscent of the summer showdown in Congress. In August, in order to avoid a default on the country's debt, Congress designated the 12-member supercommittee to shave $1.2 trillion from the deficit.

Tobias Levkovich, a Citigroup analyst, said the supercommittee's inability to overcome the partisan divide does not imply nothing can be done in Washington.

He said the bigger issue of controlling the deficit will more likely wait for the 2012 election outcome, as both President Obama "and his challenger will lay out plans for dealing with the budget deficit and the American people will have to decide which plan they consider less offensive in terms of tax hikes and spending cuts."

Levkovich said hopes for the committee's success were muted since the membership was announced months ago. Regardless, he said the markets showed disappointment.

In a small survey of 128 respondents, Citigroup found 71 percent of investors believe the supercommittee will result in a "partial success," while 15 percent believe the supercommittee will be fully successful at reaching $1.5 trillion in savings. Thirteen percent believe the supercommittee will fail outright, according to the survey, the results of which were reported Nov. 16.

If the supercommittee results in a "partial success," 24.2 percent of respondents believe the S&P stock index will be flat in its immediate response, while 21.1 percent believe it will be 1 to 2 percent lower.

Copyright 2011 ABC News Radio


Warren Buffett to Congress: Stop 'Coddling' Billionaires

ABC News(NEW YORK) -- When it comes to taxes, Warren Buffett, one of the country's richest men, says that he and other high-earning Americans need not be “coddled” by Congress, and that “most wouldn’t mind being told to pay more.”

In an op-ed published in The New York Times, the Berkshire Hathaway chairman and CEO says, “My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.”

“Last year my federal tax bill -- the income tax I paid, as well as payroll taxes paid by me and on my behalf -- was $6,938,744,” Buffet writes. “That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income -- and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.”

Buffett calls on the Super Committee to raise tax rates on the roughly 240,000 American households which netted more than $1 million in income in 2009.

“I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains,” Buffett says in The New York Times. “And for those who make $10 million or more -- there were 8,274 in 2009 -- I would suggest an additional increase in rate.”

“I know well many of the mega-rich and, by and large, they are very decent people,” Buffett writes. “They love America and appreciate the opportunity this country has given them. Many have joined the Giving Pledge, promising to give most of their wealth to philanthropy. Most wouldn’t mind being told to pay more in taxes as well, particularly when so many of their fellow citizens are truly suffering.”

Copyright 2011 ABC News Radio

ABC News Radio