Moody's Says U.S. Credit Risk Rising

Moody's Investor's Service warned Thursday that the lack of government action on the budget deficit puts the U.S. at risk for a ratings downgrade. The report came hours after Standard & Poor's downgraded Japan, and the IMF reiterated warnings about both countries issued last year. Moody's said in December that extending the Bush tax cuts would make the outlook negative for the U.S. to keep its AAA rating. The report expresses concern about the new Congress, saying that it sees the new members even less likely to rein in the deficit. A downgraded credit rating pushes a country's borrowing rates up, making debt even more expensive; a negative outlook like this one increases the chance of a ratings downgrade in 12 to 18 months.