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Moody’s warned Washington on Thursday it expects to put the U.S.’s perfect credit rating on review for a possible downgrade if Congress fails to make progress on raising the country’s debt ceiling by mid-July.

The notice from the ratings agency serves as a fresh reminder to lawmakers and investors about the high-stakes negotiations surrounding the deeply-divided issue.

While the White House and Treasury Department have warned failure to raise the $14.294 trillion debt ceiling by early August will result in a financial crisis, Republicans have said the U.S. will be able to avoid a default while lawmakers negotiate deeper budget cuts.

“The heightened polarization over the debt limit has increased the odds of a  short-lived default,” Moody’s said in a statement. “If this situation remains unchanged in coming weeks, Moody's will place the rating under review.”

Moody’s sees a
“very small,” but “rising” chance of a default, which would be the first in U.S. history. U.S. bonds, or Treasurys, are seen as among the safest investments in the world.

It’s worth noting the Moody’s comments come weeks after rival Standard & Poor’s placed the U.S. credit rating on watch for a downgrade. That warning helped raise the awareness of the nation’s fiscal troubles and also sparked alarm on Wall Street.
Politicians entrenched in the heated battle over the debt ceiling quickly responded to the Moody's warning.

"This report reinforces the point Republicans have been making all year: an increase in the debt limit without major spending cuts will hurt our economy and destroy jobs," House Speaker John Boehner said in a statement. He added that the Moody's warning "makes clear that if we let this opportunity pass without real deficit reduction, America’s financial standing will be at risk."

so a VERY SMALL chance of a SHORT-LIVED default? not exactly the armageddon as promised.

it's amazing to me - at this time, with america in such bad fiscal shape, and teetering on economic collapse - that the democrats are STILL putting up such a fight over meaningful cuts. even socialist europe got the message from the "worst economic collapse since the great depression" (haha), and have ebbed the tide of burdensome, bloated government. meanwhile, obama was trying to get them to spend more. more failed stimulus, more government involvement and control. it's complete and utter madness, that contradicts all common sense.

by the way, the "straight vote" on the debt ceiling saw nearly half (82) of the democrats in the house voting against the measure. surely this is a sign that the time has finally come, and that REAL cuts must come with this increase, which i would only vote for on a short term basis, to keep forcing necessary reforms.

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If I remember correctly, those austerity measures resulted in riots across Europe, including in the UK, and that most of those nations are not doing a hole heck of a lot better now for their troubles.  Perhaps Miles would be nice enough to update us on how things are in his country and to correct me if I am mistaken.

And what would the results be of a short term default?  How will the stock markets react?  Just because it would be short lived doesn't mean the results inherently will (obviously this is speculation, I study rocks not economics).

As for cuts, both parties want to make cuts, they just don't agree on what.  Many Democrats won't stomach strong cuts to the EPA or Medicare/Medicaid while many Republicans won't allow for substantial reductions in defense spending and several forms of corporate welfare (oil and ag subsidies anyone?).  What to do?

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Originally Posted by Bryant Platt:
If I remember correctly, those austerity measures resulted in riots across Europe, including in the UK, and that most of those nations are not doing a hole heck of a lot better now for their troubles.  Perhaps Miles would be nice enough to update us on how things are in his country and to correct me if I am mistaken.

And what would the results be of a short term default?  How will the stock markets react?  Just because it would be short lived doesn't mean the results inherently will (obviously this is speculation, I study rocks not economics).

As for cuts, both parties want to make cuts, they just don't agree on what.  Many Democrats won't stomach strong cuts to the EPA or Medicare/Medicaid while many Republicans won't allow for substantial reductions in defense spending and several forms of corporate welfare (oil and ag subsidies anyone?).  What to do?

dude, entitlements make up most of our spending. there HAS to be a reformation of the system if we're ever going to climb this mountain of debt. they can't be ignored.

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and actually, there's already been cuts in defense spending.

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Originally Posted by Dødherre Mørktre:

Originally Posted by Bryant Platt:
If I remember correctly, those austerity measures resulted in riots across Europe, including in the UK, and that most of those nations are not doing a hole heck of a lot better now for their troubles.  Perhaps Miles would be nice enough to update us on how things are in his country and to correct me if I am mistaken.

And what would the results be of a short term default?  How will the stock markets react?  Just because it would be short lived doesn't mean the results inherently will (obviously this is speculation, I study rocks not economics).

As for cuts, both parties want to make cuts, they just don't agree on what.  Many Democrats won't stomach strong cuts to the EPA or Medicare/Medicaid while many Republicans won't allow for substantial reductions in defense spending and several forms of corporate welfare (oil and ag subsidies anyone?).  What to do?

dude, entitlements make up most of our spending. there HAS to be a reformation of the system if we're ever going to climb this mountain of debt. they can't be ignored.

Perhaps, but I don't think the proposals set forth are remotely acceptable.  Some things, like not allowing SS benefits to be available until 65 or some such move may be acceptable, but those are not the kinds of reforms being put forth.

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What aggrevates me is that while House Republicans have said thy would  willing to look at raising the debt ceiling if the President would prmise an equal amount of cuts...the Presdent STILL wont agree.  To me that's proof Obama merely wants to spend us into the poor house.

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Originally Posted by Dennis Young:
What aggrevates me is that while House Republicans have said thy would  willing to look at raising the debt ceiling if the President would prmise an equal amount of cuts...the Presdent STILL wont agree.  To me that's proof Obama merely wants to spend us into the poor house.

Because he has every incentive to.  Just because you disagree with his ideology doesn't justify idiotic accusations.

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Originally Posted by Bryant Platt:

Originally Posted by Dødherre Mørktre:

Originally Posted by Bryant Platt:
If I remember correctly, those austerity measures resulted in riots across Europe, including in the UK, and that most of those nations are not doing a hole heck of a lot better now for their troubles.  Perhaps Miles would be nice enough to update us on how things are in his country and to correct me if I am mistaken.

And what would the results be of a short term default?  How will the stock markets react?  Just because it would be short lived doesn't mean the results inherently will (obviously this is speculation, I study rocks not economics).

As for cuts, both parties want to make cuts, they just don't agree on what.  Many Democrats won't stomach strong cuts to the EPA or Medicare/Medicaid while many Republicans won't allow for substantial reductions in defense spending and several forms of corporate welfare (oil and ag subsidies anyone?).  What to do?

dude, entitlements make up most of our spending. there HAS to be a reformation of the system if we're ever going to climb this mountain of debt. they can't be ignored.

Perhaps, but I don't think the proposals set forth are remotely acceptable.  Some things, like not allowing SS benefits to be available until 65 or some such move may be acceptable, but those are not the kinds of reforms being put forth.

It is important to remember that SS is not an entitlement program. We actually pay for it in a separate "tax". It is not given freely. Problem is government can't keep their hands off of it. That is why I am pro-privatizing it. Good reforms of Medicare is being put forth (our biggest, most wasteful entitlement program) and the Dems are demonizing it. They are even spreading outright lies about it.

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Originally Posted by Bryant Platt:

Perhaps, but I don't think the proposals set forth are remotely acceptable.  Some things, like not allowing SS benefits to be available until 65 or some such move may be acceptable, but those are not the kinds of reforms being put forth.

you can't raise the retirement age enough to make the programs solvent. it comes down to a simple truth. either we find a way to cutback on the amount of government money going toward benefits (which leaves only the free markets to pick up the slack), OR the programs go bankrupt and no one gets any checks. that is the sobering truth we are faced with.

this is the same principle behind the austerity measures in europe. yes, there were riots in the streets from the marxists and socialists, and no, they're not doing much better than us now, but at least they didn't go belly up, and have to ask for even more handouts from the EU, which is about out of money. it's ridiculuous. there is a point of no return, and we're steaming ahead at full speed. we have to make drastic changes. we have to endure a little bit of pain over a long time, to avoid the life threatening blow. there's no way around it.