Major credit rating agency Moody’s said that it is considering downgrading the United States’ sterling credit rating as lawmakers debate the debt ceiling.
“The review of the U.S. government’s bond rating is prompted by the possibility that the debt limit will not be raised in time to prevent a missed payment of interest or principal on outstanding bonds and notes. As such, there is a small but rising risk of a short-lived default,” Moody’s said.
Fox News reports that both sides used the report from Moody’s in an attempt to leverage the other in the debt limit debate. Aug. 2 has been given as the date by Treasury Secretary Timothy Geithner when America will begin defaulting on its obligations if the debt ceiling is not raised.
“An actual default, regardless of duration, would fundamentally alter Moody’s assessment of the timeliness of future payments, and a AAA rating would likely no longer be appropriate,” said the credit rating agency.
A spokesman for Speaker of the House John Boehner (R-Ohio) said that the warning from the credit agency shows that President Barack Obama must take action to reduce spending.