Moody Predicts Long-term Rating Problems if US Fails to Raise Debt Ceiling

Via Bloomberg:  U.S. Default Would Change Fundamentals of Rating, Moody’s Says

The U.S. would risk not winning back its top Aaa credit rating soon if a failure by Congress to raise the nation’s debt limit causes even a short-term default, according to Moody’s Investors Service’s senior credit officer.

“Up until now, our assumption was that the risk is virtually zero of them ever missing an interest payment,” Moody’s Steven Hess said during an interview. “If they actually miss a debt payment, then it’s a fundamental change.”

So, yes, by all means, let’s play chicken with the national economy.

And, yes, we need to address the long-term fiscal situation as well:

Moody’s may still assign a negative outlook within a few months if the government fails to agree on a plan that would begin reducing its debt ratio to gross domestic product in three to four years, Hess said.

FILED UNDER: Deficit and Debt, Quick Takes, US Politics
Steven L. Taylor
About Steven L. Taylor
Steven L. Taylor is a Professor of Political Science and a College of Arts and Sciences Dean. His main areas of expertise include parties, elections, and the institutional design of democracies. His most recent book is the co-authored A Different Democracy: American Government in a 31-Country Perspective. He earned his Ph.D. from the University of Texas and his BA from the University of California, Irvine. He has been blogging since 2003 (originally at the now defunct Poliblog). Follow Steven on Twitter


  1. legion says:

    I think it’s pretty clear from the previous posting that Boehner, much as I dislike his party, is at least interested in being a party leader & doing the things a party leader needs to do. Cantor, OTOH, is an opportunistic horse’s ass just looking for his next stepping stone. If he shoulders Boehner out of his job, I absolutely guarantee that he will cause exactly this sort of financial train-wreck, just so he can try to blame it on Obama & get into whatever next job he’s looking for.

  2. PJ says:

    legion, don’t be so sure about Boehner doing what he should…

  3. legion says:

    Oh, I don’t for a minute think his ideas are _right_, let alone right for the country, but I think he at least realizes that deliberately trashing the entire US economy for a generation or two just to make political hay would be a terrible idea, both for the country and his own party. I don’t think Cantor can see past the tip of his own nose.