A trader on the New York Stock Exchange floor: Credit rating agency Fitch may be the next to cut America's AAA rating.

Spencer Platt/Getty Images

he cloud over the federal government's credit rating grew darker this week, as the Fitch agency warned that it would downgrade America's coveted AAA rating unless Congress comes up with a "credible plan" to shrink its ballooning budget deficits. Fitch revised its outlook on the federal government's creditworthiness from "stable" to "negative" after a congressional super committee failed to meet its goal of reducing the spending gap by $1.2 trillion over the next decade. Another of the big three ratings agencies, Standard & Poor's, already downgraded Treasury bonds this summer, rattling financial markets. Is the nation headed for another painful downgrade?

Quite possibly: Fitch is looking for what it calls a "credible medium-term deficit reduction plan" by 2013, says Mark Gongloff at The Wall Street Journal. That's no small task considering the gridlock in Washington, and I'd put the chances of another downgrade at about 50-50. "Congratulations again, Super Congress."
"Fitch affirms U.S. as AAA, but cuts outlook to negative"

Probably not. Next to Europe, we look great: The U.S. has no reason to fear another downgrade, says Michael Aneiro at Barron's. Yes, we're swamped in debt, but so is everyone else. And "with the euro taking daily steps toward implosion thanks to sovereign debt perils in a variety of euro-zone countries, investors continue to deem U.S. Treasury bonds the safest investments around."
"Fitch affirms U.S. AAA rating but outlook now negative"

But soon, U.S. bonds might look as risky as Europe's: It's true that the "monetary Armageddon" in Greece and Italy makes Treasury bills look good by comparison, says Alex Klein at New York. But how long will that last? In Europe, "safe havens are dropping like flies," with investors starting to turn up their noses at French debt, and even German bonds, long "the safest bet in Europe." If we're not careful, U.S. debt could be "the next 'used-to-be-riskless' asset in a very risky financial world."
"Fitch threatens to downgrade U.S. credit rating"