Updated at: 11/07/2012 12:05 PM
By MARCY GORDON
(AP) WASHINGTON - Fitch Ratings says President Barack Obama must pivot off his re-election victory and quickly forge an agreement with Congress to prevent a series of tax increases and spending cuts that kick in next year.
The credit rating agency issued a news release Wednesday _ hours after Obama won a second term _ saying the president will have "No Fiscal Honeymoon." Fitch says Obama must work toward a credible plan to avoid the so-called fiscal cliff or risk losing the federal government’s top `AAA’ rating next year.
The agency 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. About $800 billion in tax increases and spending cuts for 2013 would take effect starting in January.
The government’s failure to come up with a plan to reduce the deficit led Standard & Poor’s to cut its rating of long-term U.S. Treasury securities last year from `AAA’ to `AA+’. It was the first-ever downgrade of U.S. government debt.
Fitch said Obama and Congress also must reach a deal on raising the nation’s borrowing limit.
Treasury Department officials have said they expect the government to hit the current borrowing limit of $16.39 trillion at the end of the year unless Congress votes to increase it. The U.S. debt stood at $16.16 trillion as of Oct. 31.
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.
(Copyright 2012 by The Associated Press. All Rights Reserved.)