Moody’s Issues Credit Rating Warning
Moody’s Investor Service said on Tuesday that the looming fiscal cliff and ongoing budget impasse could compel the rating agency to cut its “Aaa” rating on U.S. government debt if negotiations fail. A year ago, in the midst of the partisan debate over the U.S. debt limit, Moody’s reduced its outlook on U.S. debt to “negative,” which serves as a warning that the rating was in danger of being downgraded. Standard and Poor’s actually did reduce the country’s credit rating on its bonds from “AAA.” If the White House and lawmakers don’t reach a budget deal before the end of the year, about $1.2 trillion in spending cuts and tax increases will automatically kick in, which analysts said could send the economy back into a recession. No negotiations are expected until after the November election.
Treasury Reduces Stake in AIG
The U.S. Treasury on Tuesday announced it further reduced its stake in American International Group and said that the United States would now profit $15.1 billion from bailing out the insurer, the Associated Press reports. The underwriters to the Treasury Department's $18 billion AIG stock sale are expected to buy another $2.7 billion worth of the company's shares, boosting the returns on the U.S. government's investment. Combined, the sales reduce the Treasury's stake in AIG to 15.9 percent from 53.4 percent. The Treasury will be left with about 234.2 million shares in AIG when the offering closes, the AP said. The government had held a nearly 80 percent stake in the company.
Annual Health Insurance Premiums Rise 4 Percent
Annual premiums for job-based family health insurance are averaging $15,745, a four percent increase, according to an annual survey released Tuesday by Kaiser Family Foundation. Of this, employees pay more than $4,300. The increase is rising more than twice as fast as wages, the survey said. Analysts generally agree that because of the recession and prolonged economic recovery, consumers are forgoing trips to the doctor, which have helped keep health care spending and insurance premiums lower than the double-digit increases experienced in 2004 and before, the Mercury News reports.
Whistleblower Awarded $104 Million
The Internal Revenue Service has awarded a former UBS banker $104 million for revealing a tax evasion scheme that cost the US government billions of dollars in taxes. Bradley Birkenfeld reported his tax evasions allegations at UBS to U.S. authorities in 2007. The $104 million is said to be the largest award ever bestowed on a whistleblower. UBS plead guilty to criminal charges and paid $780 million in a settlement with the Department of Justice. The U.S. government has since collected $5 billion in back-taxes. Birkinfeld was recently released from prison after serving 31 months for helping a billionaire property developer avoid paying $7 million in taxes.
Goodbye to Summer, but Not to High Gas Prices
Hurricane Isaac is being blamed for increases in the price of gas as the summer driving season coasted to a stop. The average price of a gallon of regular gas increased nationally 1.5 cents to $3.84, according to Tuesday AAA readings. Gas prices were expected to dip once Gulf Coast refinery facilities came back online in the wake of the storm, but Isaac’s devastation hit close to Sept. 15, which is when the U.S. switches to a cheaper winter blend of gasoline, CNN reports. The Northeast, which imports more gas than the rest of the county, was particularly hard hit, with gas prices climbing as much as five cents in one day.