In case anyone had forgotten, Moody’s Investors Service issued a stark reminder Sept. 11 that the federal government is speeding headlong toward a political and financial cliff.

On Jan. 1, a number of temporary tax cuts are due to expire just as new spending restraints kick in, pulling hundreds of billions of dollars out of the U.S. economy and potentially triggering another recession. At the same time, Washington is expected to reach the limit of its borrowing authority, necessitating another increase in its debt limit. If lawmakers and the White House can’t reach a budget deal that effectively manages those problems, Moody’s said, it expects to downgrade the federal government’s credit rating.

That might seem unduly pessimistic if so many congressional Republicans hadn’t called for the government to stiff its creditors last year instead of raising the debt ceiling. One of the three major ratings agencies, Standard & Poor’s, downgraded U.S. debt after that acrimonious episode; now, Moody’s is threatening to do so as well.

The message from the analysts at Moody’s and S&P is that lawmakers can’t keep putting off the day of reckoning. Moody’s set a reasonable condition for avoiding a downgrade: adopting policies that stabilize, then reduce the debt as a percentage of the U.S. economy over the next several years.

It means bringing the two polarized and recalcitrant sides together in a compromise, something Washington’s current occupants have been singularly unable to do. They’re running out of time to learn how.

Editorial by the Los Angeles Times

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