Moody's Says No to U.S. Debt Downgrade for Now But Maintains Negative Outlook due to Political Squabbling in Washington D.C.

Moody's Investors Service threw the U.S. a lifeline of sorts by sticking to with its AAA bond rating but with a negative outlook for the country, essentially distancing itself from Standard & Poor's recent downgrade to AA+.

Moody's said it expects the economy will improve and additional measures to reduce the budget deficit will be in place by 2013. The rating agency said this is why it reiterated its AAA rating for U.S. debt on Aug. 2, when the Senate agreed on a 10-year plan to reduce the deficit by more than $2 trillion.

But Moody's said that its negative outlook, which it also assigned on Aug. 2, was due to political squabbling in Washington -- the biggest potential threat to the bond rating. "We expect the economic recovery will continue and additional budget deficit reduction initiatives will be put in place by 2013," said Moody's, in its report on Monday. "The political parties now appear to share similar deficit reduction objectives."

But Moody's also said, "However, the disagreement between the two parties over the means by which to achieve deficit reduction and the difficulties experienced in reaching a compromise on raising the debt ceiling highlight the risks of political polarization. This uncertainty is among the drivers of our negative outlook." Source

The politicians in Washington D.C. are pointing fingers at one another for this mess, but they are all to be blamed, including President Obama and former President George W. Bush, who laid the foundation for this mess. COMPROMISE is the name of the game and we have to brand it in the heads of these politicians that we want compromise or they need to look for another line of work when they come up for reelection.