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Virginia Politics
Posted at 10:35 AM ET, 08/09/2011

McDonnell: Virginia hopes to keep top bond rating

Virginia Gov. Bob McDonnell (R) said Tuesday morning that he has not received word from bond rating agencies that the state’s credit will be downgraded following Standard & Poor’s unprecedented downgrading of the federal government last week.

“We haven’t received any direct communication from any of the three top bond rating agencies that Virginia is in immediate peril of losing its 75-year sterling AAA bond rating,’’ McDonnell said on his monthly call-in show on WNIS in Norfolk. “We’re staying in touch with them.”

Moody’s Investors Service confirmed the state’s AAA rating late last week after placing Virginia, Maryland and three other states on a watch list three weeks earlier, warning it would review and might downgrade each within a week following a federal downgrade.

“We’re obviously very disappointed Moody’s had placed Virginia on a watch list about three weeks ago directly as a result of the federal inaction at the time,’’ he said.

A downgrade would make it harder and more expensive for Virginia to borrow money.

McDonnell said Republicans and Democrats in Washington shared the blame, but faulted the Obama administration for “a lack of leadership for coming up with a solid plan for a solid budget to engage in longterm deficit reduction.”

He called the the deal passed by Congress and signed by Obama a “small start’’ and said he “reluctantly’’ supported raising the debt ceiling because the federal government was out of options.

“What’s happened in Washington is embarrassing,’’ McDonnell said. “For the greatest country on Earth to be on the brink of defaulting on its obligations is unacceptable. We’ve overspent and overpromised...for decades. Everybody knows this day of reckoning was coming for years.”

Localities in the Washington region also had been on a watchlist for a possible downgrade more than a week before Congress passed a deal to raise the debt ceiling. The area is particularly vulnerable because it has a high concentration of federal employees and government contractors.

Virginia had 15 municipal authorities on the list, the highest of any state. They included Alexandria, Arlington County, Fairfax County, Fairfax City, the Fairfax County Water Authority, Herndon, Loudoun County, Prince William County and Vienna.

“The party is over,’’ McDonnell said. “The money flow from Washington is over. The federal government is broke. That’s the straight talk we need...We are in bad shape.”

By  |  10:35 AM ET, 08/09/2011

 
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