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Wall Street analysts say the U.S. has only escaped the debt trap that is engulfing Greece and other European nations because it prints the world’s reserve currency, the dollar, and remains a relatively safe haven in a troubled global economy. That makes foreigners more willing to provide the U.S. with low-cost credit than other nations. Because of the long-running debt crisis in Europe, global investors have flocked to U.S. markets despite the S&P downgrade last year, even driving the interest rates Treasury pays on its debt recently to record lows.

“While the metrics in the U.S. appear worse [than European countries such as France], the fact it issues the world’s trading currency has so far placated investor concerns,” said Richard Batty, global investment strategist at Standard Life Investments. The U.S. has “an overall ability to engineer policies in aggregate to arrest a lurch into a debt trap” because of that, he said.

Putting Washington on notice

The move by ratings agencies essentially puts both presidential candidates as well as members of Congress on notice that the financial dangers of the mounting debt are growing, while it heightens the importance the upcoming elections hold in deciding the future direction of the government. Signs already had emerged that the elections are more focused than usual on the question of the national debt and how to control it.

Many Wall Street analysts credit Republican presidential candidate Mitt Romney’s selection of running mate Rep. Paul Ryan — the champion of the House’s spending cut plan, which would radically reform the fast-growing Medicare and Medicaid entitlement programs — for putting the crucial issue of entitlement reform before voters.

“Like his proposal or not, unlike anyone else in Washington, Ryan deserves credit for having the political courage to have a budget plan that addresses difficult issues,” said Ward McCarthy, chief economist at Jefferies & Co.

“This will drive much of the campaign and debate rhetoric to topics that need public dialogue and debate. Ideally, this campaign should revolve around the economy and fiscal policy, as those are the two most important issues for this country at this point in time.”

Joseph G. Carson, economist at AllianceBernstein, agreed that much is riding on the outcome of the elections, in which Mr. Romney has called for far-reaching entitlement reforms like those proposed by Mr. Ryan, coupled with increases in defense spending and further tax cuts. President Obama, by contrast, wants to avoid radical changes in the entitlements, while cutting defense and raising taxes from wealthier Americans to maintain a higher level of domestic spending.

“The U.S. electorate is being offered two different fiscal visions for the future,” Mr. Carson said. “In fact, we think that there probably has not been such a wide gap between the federal budget platforms of a sitting president and a candidate since the 1980 elections, when Republican presidential nominee Ronald Reagan committed to a major, long-term defense buildup, in contrast with Jimmy Carter’s policies of staying with the status quo.”

“The central theme in the Ryan budget is that controlling mandatory spending is critical to reducing the size of government and deficits. Obama’s budget assumes that the general public wants to maintain the size of current social programs and extract more revenues to pay for them,” Mr. Carson said. “Whoever wins the election must ensure that under any plan, a long-term budget should seek to balance the government’s books, meet the needs of its citizens, and stop draining resources from the private economy, in order to help promote economic growth.

The White House was silent on the Moody's announcement, but House Speaker John A. Boehner, Ohio Republicans, and other Republicans hailed the move.

“Today’s warning by Moody's underscores the point we have been making all year,” said Mr. Boehner. “We need to fundamentally reform our tax code, reduce spending, save Medicare, and reform other critical programs that are heading toward bankruptcy. Republicans have consistently put forth budgets that achieve these pro-growth goals.”