. . . now Moody’s.
Anybody listening?
The short version, from Moody’s:
Moody’s had previously indicated that its stable outlook on the Aaa rating was based on the assumption that meaningful progress would be made within the next eighteen months in adopting measures to reverse the country’s upward debt trajectory. The debt limit negotiations represent a real near-term opportunity for agreement on a plan for fiscal consolidation. If this current opportunity passes, Moody’s believes that the likelihood of anything significant being accomplished before the next presidential election is reduced, in part because the two parties each hopes to capture both a congressional majority and the presidency in the 2012 election, after which the winning party could achieve its own agenda. Therefore, failure to reach an agreement as part of the current negotiations would increase the likelihood of a negative outlook in the near term, because the upward debt trajectory would still be in place. At present, this appears the most likely outcome, in Moody’s opinion.
The White House will try to spin this as primarily a consequence of default fears resulting from Republican obstinacy in the debt-ceiling debate, but that is not the case: Moody’s expected the debt-ceiling debate to be an opportunity for producing a credible fiscal-reform program. That has not happened, meaning that the debt will probably keep piling up until after November 2012.