Moody’s: U.S. can forget about Triple-A rating if it violates debt ceiling

The Treasury is running out of time and money. [Moody’s]


The U.S. will lose its Triple-A rating if it violates the debt ceiling, even if it quickly acts to meet its obligations, a rating agency said Tuesday.

The U.S. is facing a looming deadline to raise the debt ceiling, and there’s concern that despite the insistence of figures including Treasury Secretary Steven Mnuchin and House Speaker Paul Ryan, it won’t get lifted in time. The Treasury has estimated it will reach the debt limit by Sept. 29.

In a question-and-answer document published Tuesday, Moody’s Investors Service says the “Treasury would prioritize interest payments over other expenses to preserve the full faith and credit of the government, and to avoid disruptions in the financial markets.” The prospect of large and politically sensitive cash payments for items including Social Security benefits, Medicare and Medicaid benefits, and military personnel wages are “likely to force a timely increase in the debt ceiling.”

The other major rating agency, Standard & Poor’s, stripped the U.S. of its Triple-A rating in 2011 after a similar standoff. The Government Accounting Office estimated the delay in raising the debt limit in 2011 led to an increase in Treasury’s borrowing rates of at least $1.3 billion.

Full article: Moody’s: U.S. can forget about Triple-A rating if it violates debt ceiling (MarketWatch)

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