Was Beck Right? Despite Deal, U.S. Credit Rating Could Still Be Downgraded

On Monday, Glenn Beck wrote an op-ed for The Blaze that had a simple warning: despite an impending debt deal, the U.S. could still be downgraded, and probably would be. No plan out there "comes close to solving our long-term problem," he wrote. Guess what? A major rating agency agrees.

Even though the bill to raise the country's borrowing limit and prevent a possible U.S. debt default passed in Congress on Tuesday, it may not be enough for the U.S. to maintain its coveted AAA debt rating. That's according to Fitch Ratings.

On Tuesday, Fitch said the agreement to raise the debt ceiling and make spending cuts was an important first step but "not the end of the process." The rating agency said it wants to see a credible plan to reduce the budget deficit "to a level that would secure the United States' `AAA' status."

Sounds a lot like what Beck has been saying doesn't it?

Fitch expects to conclude its review of the U.S. sovereign rating by the end of August. As the debt deal currently stands, it is possible the U.S. debt rating could be downgraded at that time, Fitch said.

David Riley, managing director at Fitch, said in an interview with The Associated Press: "There's more to be done in order to keep the rating in the medium-term."

Fitch is one of the three main ratings agencies that rate debt that is issued by countries, states, corporations and municipalities. Ratings are based on a likelihood of default. The AAA rating is the highest available and signifies an extremely low likelihood of default.

The other two agencies - Moody's Investors Service and Standard & Poor's - declined to comment Tuesday. Both have signaled in recent weeks that they might downgrade the country's debt rating to AA. Had the U.S. defaulted on its debt, a downgrade from all three agencies would have been likely, experts have said.

Riley said he was also worried about the weak economic reports released in the last few days. On Tuesday, the Commerce Department said that consumers cut their spending in June for the first time in nearly two years. On Monday, another report showed weakness in manufacturing. And last Friday's report that in the first half of the year the economy grew at its slowest pace since the recession ended in June 2009.

"If the economy won't grow at 2.5 percent over the long term, it has pretty profound implications from a fiscal point of view," said Riley.

"That means the U.S. is poorer than it thought" and will face even tougher choices "in terms of taxes and spending," he said.

The ratings agency also said that between federal, state and local government debt U.S. government debt will be as large as the country's economy by the end of 2012 - or 100 percent of the country's gross domestic product. And Fitch said it expects the country's debt level will continue to rise. The agency warned that would not be consistent with a debt level that would allow the U.S. to retain its AAA sovereign rating

Which means a lot of things, including a possible "I told you so moment" for Beck.

The Associated Press contributed to this report.