Capitol Report: Economic inequality could cause U.S. debt downgrade, Moody’s says

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Students protest the rising costs of student loans for higher education on Hollywood Boulevard on September 22, 2012 in the Hollywood section of Los Angeles, California. Citing bank bailouts, the protesters called for student debt cancellations.

Economic inequality isn’t just an academic idea, as the recent wave of populist voting has made clear. But a new report suggests that worsening inequality in the U.S. could have financial repercussions for the country.

That report, out in early October from the credit-ratings agency Moody’s Investors Service, is called “Government of the United States: Rising income inequality will likely weigh on credit profile.” It may go without saying that when a ratings agency suggests something may “weigh on” a borrower’s credit profile, it’s a warning that a debt downgrade is what’s at risk.

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