Bond Vigilantes Pressure US Debt Stripped of AAA Ratings (1)

Even before talk of fresh unfunded tax cuts took center stage in the budget wrangling on Capitol Hill, US bond investors were making their views loud and clear: If the government keeps spending more than it takes in, there will be consequences.

Sure enough, one blow landed late Friday, when Moody’s Ratings revealed it had run out of patience and was lowering its credit score on the world’s biggest borrower below the top triple-A level. It cited a years-long pattern of rising debt and budget deficits, which show no sign of abating amid deeply-rooted political polarization.

While the Moody’s decision ...