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Ratings agencies not worried yet about super committee deal

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Steve Chiotakis: There are just five days left for the group of 12 congressional members hoping to find $1.2 trillion in cuts to the nation’s budget deficit over the next decade. But getting there has been tough. Democrats want tax hikes; Republicans want cuts to Medicaid and Medicare. There’ve been tiny hints of compromise, but still no deal. And if a deal is not reached, automatic cuts will happen.

Here to talk about how this all could play out is Jill Schlesinger,  editor-at-large at CBS/MoneyWatch, live from New York as she is every Friday morning. Hey Jill.

Jill Schlesinger: Good morning.

Chiotakis: I know the last time we had a big budget showdown in the Congress, the U.S. credit rating got downgraded. Could that happen again?

Schlesinger: I don’t think so. Ratings agencies have said that while a super committee failure would be negative, these agencies do expect $1.2 trillion in planned cuts to occur — one way or another. So their ratings outlooks remain unchanged right now.

Chiotakis: One way or another — all right. So how are the folks on Wall Street watching all of this — your friends down there in lower Manhattan?

Schlesinger: I’d say with a sense of bemusement and disdain. Look, if no deal occurs next week, the super committee could actually put in place a mechanism to address these issues next year — maybe it’s a super-duper committee!

Markets should be satisfied with that action. But if nothing happens next year, and credit agencies do consider another downgrade, investors are going to get nervous and we could see another swoon just like the one we saw during that debt-ceiling debacle in August.

Chiotakis: I think we have more stuff to add to the lexicon here: “super-duper committee.”

Schlesinger: I love it.

Chiotakis: Jill Schlesinger from CBS/MoneyWatch. Jill, thanks.

Schlesinger: Take care.

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