Moody's: Implementation of Obama Plan Not Likely

Published September 26, 2011

| Reuters

President Barack Obama's deficit reduction plan would be positive for U.S. ratings but chances of its implementation are "extremely low," Moody's Investors Service said on Monday.

Moreover, the ratings agency warned in a report, deficit reduction in the United States is being made more difficult by the threat of lower economic growth.

Moody's noted Obama's plan is the latest in a series of proposals that, together, demonstrate that substantial deficit reduction is the goal of the administration and the leadership of both political parties.

The U.S. growth outlook, however, is the main problem for all of those proposals.

"All of those plans would likely result in a declining debt trajectory over the coming decade if underpinned by reasonably steady economic growth," Moody's analyst Steven Hess wrote in the report.

"We think that economic growth in the U.S. will remain well below potential through at least 2012 and will be below growth rates assumed in all of the plan's projections," he said.

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