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US government credit rating in danger of downgrade

June 3, 2011 12:00:00 AM PDT
The U.S. government's credit rating could be in danger of being downgraded if issues surrounding the nation's debt aren't resolved soon, warned a credit rating agency.

The warning from Moody's Investors Services comes as House Republicans and President Barack Obama meet at the White House.

Republican lawmakers want spending cuts before they'll agree to raise the country's borrowing limit.

The government has already hit the current debt limit of $14 trillion. Unless Congress raises it by Aug. 2, the government will be forced into its first-ever default, with potentially catastrophic results for the economy.

A lower credit rating could ripple through the U.S. economy in the form of higher interest rates, hurting consumers still trying to recover from the worst recession in decades.

Obama told Democrats he expected talks led by Vice President Joe Biden to achieve only about 60 to 70 percent of the reductions required as part of the deal, officials said, leaving him and top lawmakers to agree on the rest. The Biden talks are aimed at producing a bipartisan debt-cutting package that could accompany a boost in the government's ability to borrow more money.

The Associated Press contributed to this report,

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