The US debt crisis could have numerous ramifications and that includes the downgrading of its triple A credit rating. Let's take a look how that could affect America's ability to borrow money in the future.
All three major agencies, Moody, S&P and Fitch have warned they may downgrade the U.S. government's triple-A credit rating.
Deven Sharma, S & P's President and Michael Rowan, managing director of Moody's, appeared before the oversight subcommittee of the House Financial Services Committee. They faced questions about the warnings they issued about the U.S. credit rating.
Deven Sharma, Presdent of Standard & Poor's said, "Debt burdens and the growth rate of debt burdens is something that does need to addressed for us to assess the credit of commercial debt at triple A levels. We do not comment on any specific plan political choices or policy choices being made, we are just commenting on what is the level of debt burden, what is the level of deficit to maintain a triple A rating. "
Moody's has also placed the rating for the US government under review for possible downgrade.
Michael Rowan, managing director from Moody's Investor Service said, "Looking at two dimensions, one being the short term risk of disruption, two being longer term issue of level of debt in relation of overall economy. "
A downgrade could send shockwaves through the financial system. The US government has had the highest credit rating for nearly a century. That rating has allowed the United States to pay the lowest interest rates possible to finance Treasury debt.
If the US Sovereign credit rating is downgraded to AA+, America's long term interest rate will go up considerably, and force the government to pay up to 100 billion extra in interests alone.
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