Fitch says 'fiscal cliff' may cost US 'AAA' rating

NEW YORK (AP) -- Fitch warned that the U.S. is more likely to lose its top-notch "AAA" rating if lawmakers cannot agree on how to cut the deficit and avoid the broad government spending cuts and tax increases that go into effect next year if no deal is reached.

But the credit ratings agency said in a report Wednesday that if lawmakers can agree on a deficit-cutting plan, the U.S. would likely keep its "AAA" debt rating. 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 Fitch Ratings said that President Barack Obama must work toward a credible plan to avoid the fiscal cliff or risk losing its "AAA" rating. Fitch changed its outlook for the U.S. rating 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 rating 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 right to the last minute before a compromise was reached.

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