The growing size of the U.S. debt and the concerns over how much more it will increase was very much on the minds of investors, markets, and lawmakers today.

Stocks bounced back, but only after a rocky start to the day. Meanwhile, the value of the dollar dropped and bond markets were under pressure.

Analyst said the developments were tied in part to Moody's announcement on

Friday that it was downgrading the U.S. credit rating over concerns about large annual deficits,

debt, and rising interest costs. For some explanation and perspective on what's happening here,

I'm joined now by David Wessel, director of Hutchins Center on Fiscal and Monetary Policy

at the Brookings Institution.

David, great to see you. Let's start with the impact of that Moody's decision on Friday to

downgrade the U.S. credit rating. Seems like stock investors today seem to shrug it off,

but explain what we're seeing with the dollar and in the bond markets.

Well, listen, what Moody's did was shine a flash leg on something that any

sophisticated investor and even some unsophisticated investors knew that the U.S. is on an unsustainable

budget trajectory. After all, Moody's is one of three rating agencies and the other two have

previously, one as long as 2011, stripped the other two have previously won as long as

2011, stripped the U.S. of the AAA rating. I think what's happening is that after sort of being

ignored for a while, the markets, some of the press, the pundits, and a few members of Congress

are beginning to say, wow, we have a pretty big budget

deficit. We have a large and growing federal debt. And Congress is on the verge of making it

even worse. And I think that's what the markets are focusing on. How much of what we're seeing

right now in terms of warning signs has to do with that pending

tax bill in Congress and also just the ongoing uncertainty around Harris?

I think quite a bit. So, you know, despite all the rhetoric one hears from Congress about,

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