State Treasurer Janet Cowell is concerned that the state’s AAA-bond rating could suffer if Congress fails to take action to avert defaulting on the nation’s debts.
In a letter to the state’s Congressional delegation, Cowell warned that default and the partial shutdown of the federal government could hurt the federal government’s bond rating and cascade down to the state and local level.
The reason: the state’s “dependence upon federal funds and the large military presence in the state.”
Downgraded bond ratings would translate into higher borrowing costs for North Carolina and its local governments – as well as the U.S. government, Cowell noted.
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“As a result, economic growth and jobs would suffer,” she wrote.
Cowell’s letter to the Congressional delegation was written Sept. 30 and released Tuesday in response to a reporter’s inquiry about the impact of a federal default.
Schorr Johnson, a spokesman for the Treasurer’s office, also said Tuesday in an email that although a federal default “would be a negative for the global financial markets,” the diversification of the state’s $80 billion pension fund “will help to manage any impact.”