Could Downgrade of U.S. Debt Hinder Local Governments?
Downgrade could have ripple effect, make local governments vulnerable, GMU Mercatus Center fellows say.
The downgrade by Standard & Poor's of the U.S. debt from AAA to AA+ could make it more expensive down the road for local governments to borrow, according to two professors from George Mason University's Mercatus Center. State and local governments that are otherwise doing well, but are carrying the risk of a lot of federal projects on their balance sheets may find it more expensive to borrow,” said Eileen Norcross, a fellow at the Mercatus Center at George Mason University in Fairfax. Northern Virginia, and Fairfax County specifically, is home to a high concentration of government contracting firms that represent more than $23 billion in government contracts and provide critical services like defense support, information technology, …
