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>>> WE'VE GOT MAJOR BREAKING
NEWS THAT WE'RE FOLLOWING HERE
IN "THE SITUATION ROOM."
ONLY MOMENTS AGO, FITCH PLACED
THE UNITED STATES' AAA CREDIT
RATING ON A NEGATIVE WATCH LIST.
THIS IS A SIGNIFICANT
DEVELOPMENT.
THEY HAVE NOT YET DOWNGRADED THE
U.S.' AAA CREDIT RATING AS S&P
DID IN 2011 DURING THIS LAST
GOVERNMENT SHUTDOWN CRISIS, BUT
FITCH IS NOW SAYING THAT BECAUSE
OF WHAT'S GOING ON, THE U.S. NOW
HAS A RATING WATCH NEGATIVE.
THAT'S A TECHNICAL TERM.
HASN'T YET DOWNGRADED FROM AAA
BUT THIS WILL NO DOUBT PUT
ENORMOUS POLITICAL PRESSURE ON
MEMBERS OF CONGRESS TO GO AHEAD
AND MAKE A DEAL, EXTEND THE
NATION'S DEBT CEILING, GET THE
GOVERNMENT FULLY OPERATIONAL.
LET'S DISCUSS WHAT'S GOING ON
WITH OUR CHIEF POLITICAL
ANALYST, GLORIA BORGER AND OUR
CNN POLITICAL COMMENTATOR, RYAN
LIZZA, THE WASHINGTON
CORRESPONDENT FOR "THE NEW
YORKER" MAGAZINE.
GLORIA, THIS IS A BIG DEAL.
MOODY'S HASN'T DONE IT YET.
THERE ARE THREE MAJOR FINANCIAL
RATINGS SERVICES, S&P, FITCH AND
MOODY'S.
MOODY'S HASN'T DONE ANYTHING
YET.
S&P DID DOWNGRADE THE U.S. LAST
TIME.
NOW FITCH IS WARNING THAT UNLESS
THE CONGRESS AND THE PRESIDENT
GET THEIR ACT TOGETHER QUICKLY,
THERE COULD BE A DOWNGRADING OF
THE U.S. AAA RATING WHICH WOULD
HAVE ENORMOUS FINANCIAL
RAMIFICATIONS FOR ALMOST
EVERYONE WATCHING THIS BROADCAST
RIGHT NOW.
>> EXACTLY.
ONE CAN ONLY HOPE THAT THIS PUTS
SOME PRESSURE ON PEOPLE IN
CONGRESS TO COME UP WITH SOME
KIND OF A DEAL THAT THEY CAN ALL
SWALLOW, AND THEY BETTER DO IT
PRETTY QUICKLY.
TIME IS OF THE ESSENCE.
HOUSE REPUBLICANS ARE IN A
SITUATION WHERE THEY CAN'T
FIGURE OUT WHETHER THEY'VE GOT
THE VOTES.
THE SENATE IS ON HOLD, WAITING
FOR THE HOUSE REPUBLICANS TO
ACT.
IN THE MEANTIME, THE GLOBAL
FINANCIAL COMMUNITY IS WATCHING
ALL OF THIS AND SAYING NOT THAT
THE UNITED STATES CAN'T PAY ITS
DEBT, BUT THAT IT ACTUALLY MIGHT
BE REFUSING TO PAY ITS DEBT.
SO WE HAVE THIS NEWS FROM FITCH
AND I'M SURE IT'S REVERBERATING
UP ON THE CAPITOL --
>> I'M SURE IT IS.
WHAT PEOPLE HAVE TO APPRECIATE,
RYAN, I KNOW YOU DO, IS THAT IF
THEY DOWNGRADE THE U.S.' AAA
CREDIT RATING, THAT MEANS HIGHER
INTEREST RATES.
THAT MEANS PEOPLE OUT THERE WILL
PAY HIGHER INTEREST RATES FOR
THEIR CARS, IF THEY TAKE OUT A
LOAN FOR THEIR CAR OR MORTGAGE
OR SO MUCH ELSE.
BUSINESSES WILL HAVE HIGHER
INTEREST RATES.
THAT WILL TRICKLE DOWN TO HIGHER
COSTS FOR PEOPLE.
IT COULD HAVE A REAL NEGATIVE
EFFECT ON THE U.S. ECONOMY
ECONOMIC GROWTH, JOB CREATION.
>> IT'S LIKE ANYONE'S CREDIT
RATING, WHEN WE APPLY FOR A LOAN
OR MORTGAGE, YOU HAVE A CREDIT
RATING.
THAT TELLS THE BANK IS THIS
PERSON TRUSTWORTHY TO PAY THEIR
BILLS.
THESE RATING AGENCIES ARE SAYING
WE'RE NOT CONFIDENT ANYMORE THAT
THE UNITED STATES IS AS
TRUSTWORTHY AS IT USED TO BE TO
PAY ITS BILLS.
THINK ABOUT THE IMPLICATIONS OF
THAT.
THAT IS INSANE.
IF YOU REMEMBER IN 2011 WHEN S&P
DID THIS, THEY SAID ONE, WE'RE
NOT SO SURE THEY'VE GOT THE LONG
TERM STRUCTURAL DEFICIT UNDER
CONTROL BUT MORE IMPORTANTLY,
THEY SAID THE POLITICAL SYSTEM
IN THE UNITED STATES JUST CAN'T
HANDLE THESE PROBLEMS ANYMORE,
AND WE'RE NOT CONFIDENT THAT THE
U.S. POLITICAL SYSTEM CAN ENSURE
THAT THEY WON'T GO INTO DEFAULT.
LOOK, THEY WERE RIGHT.
BECAUSE WE'RE ON THE PRECIPICE
OF IT RIGHT NOW.
>> IT'S A GOOD THING THEY DID
THIS, AND THEY ALWAYS DO THIS
AFTER THE MARKETS CLOSE AT 4:00
P.M. EASTERN.
THE MARKETS WERE ALREADY DOWN
TODAY UNDER GLOOMY NEWS COMING
OUT OF WASHINGTON, BUT IF THEY
WOULD HAVE DONE THIS EVEN
EARLIER, THERE WOULD HAVE BEEN A
SIGNIFICANT COLLAPSE.
A LOT OF INVESTORS ARE HOPING
THAT BETWEEN NOW AND THE
REOPENING OF THE MARKETS,
THERE'S GOOD NEWS COMING OUT OF
WASHINGTON.
>> AS WE SIT HERE, JOHN BOEHNER
IS -- HOUSE SPEAKER JOHN BOEHNER
IS DISCOVERING THAT HE HAS LESS
CONTROL OVER HIS CAUCUS THAN HE
EVER THOUGHT HE HAD.
HE'S GOT A DECISION TO MAKE
RIGHT NOW ABOUT WHAT HE'S
WILLING TO DO IN TERMS OF THIS
DEBT CEILING.
THIS IS A HUGE ISSUE.
HE'S GOT TO DECIDE WHETHER HIS
SPEAKERSHIP IS ACTUALLY WORTH
THIS.
>> FRANKLY, THE PLAN IN THE
HOUSE RIGHT NOW, IT'S A PLAN TO
TAKE AWAY HEALTH BENEFITS FROM
CONGRESSIONAL STAFFERS AND
MEMBERS.