Moody's Threatens US Credit Rating Over Debt Impasse

The credit rating agency Moody’s warned Thursday that it is considering downgrading the United States’ credit rating as the odds increase that the government will default on its debt.

Moody’s said that even if Congress agrees to raise the $14.3 trillion debt ceiling, the country could face a downgrade if lawmakers don’t include a comprehensive package that meaningfully reduces the annual budget deficit.


The warnings come as President Obama and congressional Republicans are in tense negotiations to agree on a way to raise the debt ceiling and cut the deficit. The warning by Moody’s was similar to one in April by the credit rating agency Standard & Poor’s. S&P lowered the U.S. debt outlook to “negative” from “positive,” indicating the possibility of a downgrade.

Markets have so far shown little concern that Obama and congressional Republicans won’t be able to strike a deal. But Moody’s said that it believes a resolution is less and less likely.

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