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Fitch Ratings to US: Fix 'fiscal cliff' or risk credit downgrade

Fitch Ratings, a leading credit ratings agency, warned Wednesday that the US is likely to lose its top-notch debt rating if lawmakers cannot agree to a solution that prevents the economy from going over the 'fiscal cliff' at the end of 2012. Fitch Ratings called the resolution of the fiscal cliff and an increase in the debt ceiling 'pressing issues.'

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Jessica Rinaldi/Reuters/File
The Fitch Ratings building is seen in New York in this 2010 file photograph. Fitch warned Wednesday, Dec. 19, 2012 that failure to reach a deal on the fiscal cliff could result in a credit downgrade for the US.

聽Fitch Ratings warned on Wednesday that the U.S. was more likely to lose its top-notch "AAA" debt聽rating聽if lawmakers and President Barack Obama cannot agree on how to cut the deficit and avoid the deep government spending cuts and tax increases that automatically would go into effect next year.

But the聽credit聽ratings聽agency said in a report that if a deficit-cutting plan is reached, the U.S. would likely keep its "AAA"聽rating.聽Fitch would then raise its outlook to stable from negative.

"Resolution of the fiscal cliff and an increase in the debt ceiling are pressing issues that the President and Congress must address if the U.S. is to avoid a fiscal and economic crisis," the report said.

In November,聽Fitch聽Ratings聽said Obama must work toward a credible plan to avoid the fiscal cliff or risk the U.S. losing its "AAA"rating.聽Fitch聽changed its outlook for the U.S.聽rating聽to negative last year after Congress and the Obama administration failed to meet a deadline for a plan.

In the first-ever downgrade of U.S. government debt, Standard & Poor's last year cut its聽rating聽from "'AAA" to "AA+" after the government failed to come up with a plan to reduce the deficit.

The U.S. has never failed to meet its debt obligations. The battle over raising the debt limit in August 2011 went to the last minute before a compromise was reached.

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