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Friday
Jul292011

Threat of Moody's Downgrade Forces States to Push Congress on Deal

Scott Eells/Bloomberg via Getty Images(WASHINGTON) -- After Moody’s Investor Service announced it was reviewing both Maryland and Virginia for a possible downgrade from their perfect AAA credit rating, the states’ governors have ratcheted up their rhetoric demanding Congress reach a deal and avoid default.

But with a Democrat to the north and a Republican to the south, Washington’s neighbors have starkly different messages for their comrades inside the Beltway.

Maryland Gov. Martin O'Malley, head of the Democratic Governors Association, blamed the brinksmanship on the “dinosaur wing of the Republican party led by Eric Cantor” which he said is threatening to “drive us needlessly into a default.”

Meanwhile the Republican governor of Virginia, Bob McDonnell, places the stalemate blame on the president.

“Your new programs and spending, and unfunded state mandates, have exacerbated the problem,” McDonnell wrote in a letter to President Obama last week. “Your failure to get the job done is hurting the businesses and citizens of our Commonwealth.”

Both Governors are facing a possible smear on their state’s finances after Moody’s announced Thursday that it was considering downgrading the AAA credit rating of 162 local governments, including 15 in Virginia and five in Maryland.

Moody’s cited the states’ high concentration of federal employees and dependence on federal contracts as two reasons for their possible credit downgrade.

Copyright 2011 ABC News Radio

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