For the first two weeks of this month, the U.S. federal
government was mostly shut down as a result of a standoff between Republican
and Democrat lawmakers in Congress. Republicans refused to raise the country’s
debt ceiling unless President Obama’s signature health care reform law, the
Affordable Care Act, was defunded.
A congressional standoff resulted in a temporary shutdown of the U.S. federal government. mdgn / Shutterstock.com |
“It is extremely unlikely that the Treasury is not going to continue
to pay on those securities,” he said in a CNBC interview. “Hopefully it is
unlikely that we go past October 17 and fail to raise the debt ceiling, but
even if that does happen, then we think that the U.S. Treasury is still going
to pay on those Treasury securities.”
Luckily, lawmakers managed to make a deal before the
deadline passed (though they waited until the last minute to do so).
Republicans and Democrats struck a bipartisan deal that will
fund the government halfway through January, with another debt limit deadline
hitting on February 7th. The deal marks a small amount of progress,
but there is still much to be done before the new deadline.
There’s nothing stopping another standoff like this month’s
from occurring again in January and February, but Moody’s says that even if
that happens, they’ll likely take the same stance as this time around.
Steven
Hess, who is the lead U.S. sovereign credit analyst at Moody’s, said that
the U.S. debt rating is stable and that what happens in February is unlikely to
affect that. However, he did caution that things could change in the coming
months, as lawmakers begin negotiating a longer-term plan.
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