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Moody’s Likely To Cut U.S. Credit Rating If Congress Fails To Avoid ‘Fiscal Cliff’ | THE JEENYUS CORNER

THE HUFFINGTON POST

NEW YORK — The U.S. government’s debt rating could be heading for the “fiscal cliff” along with the federal budget.

Moody’s Investors Service on Tuesday said it would likely cut its “Aaa” rating on U.S. government debt, probably by one notch, if budget negotiations fail.

If Congress and the White House don’t reach a budget deal, about $1.2 trillion in spending cuts and tax increases will automatically kick in starting Jan. 2, a scenario that’s been dubbed the “fiscal cliff,” because it is likely to send the economy back into recession and drive up unemployment.

A year ago, Moody’s cut its outlook on U.S. debt to “negative,” which acts as a warning that it might downgrade the rating, after partisan wrangling over raising the U.S. debt limit led the nation to the brink of default.

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