Moody’s To Congress: More Fiscal Action Needed

Moody’s Investor Service warned lawmakers on Wednesday that passage of the deal to avert the fiscal cliff does not mean their work is finished. The credit rating agency issued a note reminding policymakers that the U.S. credit-rating outlook is negative and a downgrade could be forthcoming unless debt ratios are meaningfully reduced. The agency also pointed out a big lift left unfinished: the country’s borrowing authority, which hit its limit earlier this week and must be lifted within the next couple of months to prevent the risk of default. In short, Moody’s said, “the recent package mitigates part of the fiscal drag on the economy associated with the fiscal cliff but does not eliminate it.”