Rating agency Moody’s warned U.S. policymakers Tuesday that failure to reduce the nation’s debt will cause the country’s credit rating to take another hit.
In a statement, the agency said that if negotiations in Washington “lead to specific policies that produce a stabilization and then downward trend in the ratio of federal debt to GDP over the medium term, the rating will likely be affirmed and the outlook returned to stable. If those negotiations fail to produce such policies, however, Moody’s would expect to lower the rating, probably to Aa1.”
The country’s credit suffered a blow last summer when Standard and Poor’s downgraded the U.S. from AAA to AA+ after Congress failed to pass a debt reduction plan.
Congressional Republicans reacted to the statement by accusing the White House of callously refusing to seriously address the debt.
“Today’s warning by Moody’s underscores the point we have been making all year: the threat to American jobs comes not from action on our debt, but from inaction on our debt,” said House Speaker John Boehner (R-Ohio). “The president and his economic advisors have consistently perpetuated the myth that downgrades are caused by efforts to force the government to stop spending money we don’t have.”