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Virginia Politics
Posted at 05:00 PM ET, 07/19/2011

McDonnell ‘furious’ Virginia’s AAA bond rating in jeopardy after failed federal deficit talks

Virginia Gov. Robert F. McDonnell (R) said at a news conference Tuesday that he was “furious” that Moody’s may downgrade the state’s AAA bond rating after failed deficit talks in Washington.

“I’m very unhappy. In fact, we’re furious,’’ McDonnell said. “It’s a national embarrassment to the United States of America.”

McDonnell learned Tuesday that Virginia and four other states, including Maryland, were placed on a watch list because of their reliance on federal funds.

“It’s a source of great alarm and consternation for us in Virginia as I imagine it is for the four other governors,’’ McDonnell said.

“Through no fault of our own ... we have been informed just hours ago we may be in jeopardy and put on the watch list because the inability and ineptitude of the president and the Congress to reach a deal on how to fund the obligations of the United States of America.”

McDonnell said he plans to send a letter to federal officials Wednesday.

He and legislators visited all three ratings agencies in New York last year, including Moody’s. “Moody’s could not have been any more complimentary about the way we are doing things in Virginia,’’ he said.

Virginia has a AAA bond rating from all three rating agencies and has had a top ranking since the system to calculate the likelihood a state would repay its debt was put in place in 1938. It ranks seventh for the amount of debt — $7 billion for big-ticket projects in mental health, parks and higher education, or $895 for every Virginian.

“We’ve got a Republican House and Democratic Senate here in Virginia and we’ve laid out some very clear goals about how we’re going to work together and we get things done. A unanimous budget passes one day late. They’re a year and half late in Washington,” McDonnell said.

This marks the third time Virginia has been put on a watch list in two decades, according to Virginia Secretary of Finance Ric Brown.

“I think it’s going to take strong leadership,’’ said McDonnell, who serves as vice chairman of the Republican Governors Association. “The president and his party failed to produce a budget. They had both houses of Congress. They had the presidency, long before the Republicans took over last November. On Oct. 1, when the budget was supposed to be in place, there was no budget. The budget the president put forth was laughed out of Congress by both parties, and this president has contributed $4.5 trillion to the national debt in two and half years. It’s an unprecedented, unsustainable and immoral level of suspending.”

“Every family in America, every business in America knows you can’t spend more than you take in for a sustainable period of time or you’ll go broke. Apparently they don’t understand that in Washington, but for the last 30 years that’s what they have done. Frankly it’s been Republican and Democrat presidents and congresses that have contributed to the spending.”

McDonnell said he supports cuts in every area of the federal budget, but does not support raising taxes.

“There is plenty of blame to go around. At this point, it is a pox on both parties and both houses and the president that they can’t lead and get this done. It is imperative that they get this done because if they don’t, not only will it be embarrassing, it will create an international financial crisis, and Virginia and our four other sister states are the first ones to be victims.”

By  |  05:00 PM ET, 07/19/2011

 
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