June 3, 2011 / 3:33 PM / 6 years ago

UPDATE 1-White House: Moody's underscores need to act on debt

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ON BOARD AIR FORCE ONE, June 3 (Reuters) - A warning of a possible credit rating cut by Moody's underscores the need for a bipartisan deal on the U.S. debt ceiling, a White House spokesman said on Friday.

The Thursday report from the ratings agency made clear that Congress needs to act for the United States to meet its financial obligations, White House spokesman Josh Earnest told reporters on Air Force One.

"It also demonstrates that we need to act in a bipartisan fashion to engage in long-term deficit reform," he said on the way to Toledo, Ohio, where U.S. President Barack Obama was to visit a Chrysler plant.

Moody's said it would consider cutting the United States' top-notch credit rating if the White House and Congress do not make progress by mid-July in talks to raise the debt limit, which constrains the amount the government can borrow. [ID:nN01214888]

Earnest said there was "a lot of cause for optimism" on the U.S. economy and said a debt deal could give a further boost.

"The president believes that long-term deficit reduction is something that is good for the economy," Earnest said.

Reporting by Alister Bull, Writing by Laura MacInnis, Editing by Sandra Maler

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