Washington, DC —Leading investment agency Moody’s warned the U.S. government Thursday that its sterling credit rating could be downgraded in the next few weeks if there is no progress in Washington on reaching a deal to increase the nation’s borrowing limit.
Moody’s Investor’s Service said it would place the government’s Aaa rating under review for a possible downgrade due to the “very small but rising risk” of a short-lived default if the White House and Republican leaders can’t agree on raising the nation’s debt ceiling, which has already hit $14.3 trillion.
Moody’s announcement followed the lead set by S&P, which announced in April that it was downgrading the U.S. credit outlook to negative over the nation’s mounting debt.
The news was just the latest sign of the massive financial problems facing the nation as the economy’s recovery sputters. It also gave Republicans fresh ammunition to use against President Obama, whose 2012 re-election hopes likely hinge on how many Americans can find work in the next year.
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Ways and Means Committee Chairman Dave Camp (R-MI) made the following statement in response to the announcement by Moody’s Investors Services that America’s credit rating will “depend on the outcome of the negotiations on deficit reduction. A credible agreement on substantial deficit reduction would support a continued stable outlook; lack of such an agreement could prompt Moody’s to change its outlook to negative.”
“Today’s announcement from Moody’s simply reinforces the position already announced by S&P and a clear bipartisan majority in the House of Representatives. Any increase in the debt limit must be accompanied by significant spending reductions and real entitlement reforms that will bring down the level of the national debt. We know the main driver of our debt is health care spending — especially Medicare and Medicaid. House Republicans have put forward bold solutions to deal with this crisis and it is time for the President to come to the table and join us in talking about specific policy solutions.”