• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • Is Government Now A Bad Credit Risk?

    The credit crunch is hitting Washington, DC, as Uncle Sam maxes out his credit cards.

    In addition to the enormously costly Obama budget, all the multi-trillion dollar bailouts, stimulus, and government expansion plans depend on one thing—the ability of the U.S. government to get money and spend it. Uncle Sam gets his money from one of three ways: taxes, borrowing, or just printing more currency.

    Raising taxes during a recession is near-universally panned, except for the most die-hard liberals.

    The ability to borrow is now in trouble, after Wednesday’s effort to auction $24-billion in new U.S. government bonds met with resistance. Those willing to loan the money (by buying the bonds) have started to demand higher interest rates as the government’s ability to repay becomes more questionable.

    In the United Kingdom, where the British are also trying to stimulate their economy by massive government borrowing, the head of the Bank of England has said: “We cannot afford any more stimulus plans.” Indeed, the British couldn’t find enough investors at the offered interest rate willing to buy all $2.25 billion worth of their bonds on Wednesday.

    Meantime, Obama presses forward with spending plans that far exceed any other President’s. As one observer noted, Obama says in a few years he’ll cut the deficit in half—but only after he quadruples it first.

    Posted in International [slideshow_deploy]

    3 Responses to Is Government Now A Bad Credit Risk?

    1. Terri Dewell, Bowers says:

      I Have contacted GOP Congressman Leader, John Boehner, He is Great! I am glad to have him Representing My State! He has worked hard to get the GOP Plan Out to No Avail!! Thank You!

    2. Eric, St. Louis says:

      As Roger W Garrison makes quite clear in his speech on the Federal Reserve (http://mises.org/multimedia/mp3/Fed1992/05_Fed1992_Garrison.mp3), Treasury securities will always be 100% secure (until the collapse of the dollar) because the government will always produce more money to make payments. This auction is noteworthy only in that people paid an unexpectedly low price for the securities. These securities will keep selling, it's just that DC won't get as much money for them.

    3. Jamey, Central Calif says:

      Ask yourself this. If the federal U.S. government were a contractor, is there anything you would hire them to do for you with their past track record? Rush asked this on the radio. Poignant, as usual. A very good grounding question to ask now and again.

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.