Moody's Warns US to Strike Deal on Debt Limit

It threatens to downgrade nation's triple-A credit rating
By John Johnson,  Newser Staff
Posted Jun 2, 2011 6:23 PM CDT
Moody's Warns US to Strike Deal on Debt Limit
President Obama is greeted by Speaker of the House John Boehner at a dinner last month.   (AP Photo/Carolyn Kaster)

Moody's is getting antsy over the lack of progress on a deal to raise the debt limit and cut the deficit, reports the Washington Post. It warned today that it will consider lowering the nation's credit rating unless a deal emerges by mid-July, citing a "very small but rising risk of a short-lived default." The agency blames political obstinance: “Although Moody’s fully expected political wrangling prior to an increase in the statutory debt limit, the degree of entrenchment into conflicting positions has exceeded expectation."

The New York Times calls the move "unexpected" and is giving it serious play. MarketWatch, on the hand, sees it as a "mild warning"—in fact, more of a "warning about issuing a warning." Writes Steve Schaefer at Forbes: "Anyone that was waiting on a ratings agency action to realize that the U.S. is in troubling fiscal shape, or who thinks that such action will suddenly strike up a desire for compromise on Capitol Hill, probably has bigger troubles." (More Moody's stories.)

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