President Barack Obama's budget proposal for 2012 is not a permanent fix for finances and chances are it will be watered down in Congress, Standard & Poor's chief economist said on Monday.
David Wyss told Reuters the budget, which would allow the U.S. debt-to-GDP ratio to stabilize by 2015, is a first step in the right direction but more needs to be done before massive numbers of baby boomers retire around 2025.
That will get you through these next 10 years, and even with that you're getting levels of debt which are high, too high for comfort, Wyss said in a phone interview.
I think it's a credible plan, whether it's sufficient and whether it will ever go through Congress are two different matters.
Ratings agencies have been issuing more frequent warnings about the mounting U.S. budget deficit, in an early sign of a possible downgrade of the country's ratings that could negatively impact borrowing costs and economic growth.
Wyss declined to make direct comments on the ratings, but a recent S&P report said the U.S. stable rating outlook assumes the government will soon reveal a credible plan ... to enable the general government debt-to-GDP ratio to stabilize and then to decline in the medium term.
(Reporting by Walter Brandimarte; Editing by Andrew Hay)