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CFR.org Roundup: Raters Threaten U.S. Downgrade amarcnn | July 14, 2011 at 9:59 am | Tags: CNN Editors | Categories: Daily Roundup, Economy, United States | URL: http://wp.me/p1bJgh-28k

Editor's Note: The following is reprinted with the permission of the Council on Foreign Relations.

With President Barack Obama and Republican congressional leaders locked in a stalemate over a deficit-reduction plan necessary to raise the nation's $14.29 trillion debt ceiling ahead of an August 2 deadline, two of the "Big Three" global credit rating agencies--Moody's and Standard and Poor's--said they were considering downgrading the United States (WSJ) from its top AAA status. Moody's cited the "rising possibility" that the U.S. debt limit will not be raised in time to avoid default.

The talks have been marked by clashes between Obama and Republican House Majority Leader Eric Cantor, who also sparred with fellow Republican, Senate Minority Leader Mitch McConnell. McConnell proposed authorizing the president (WashPost) to raise the debt limit without the requirement of prior spending cuts so that the United States does not miss any credit payments.

Federal Reserve Chairman Benjamin S. Bernanke warned of a "huge financial calamity" (NYT) on par with that of 2008 if the White House and Congress do not agree on a deal to raise the debt ceiling. Read more of this post

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