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Is Government Now A Bad Credit Risk?

Posted By Ernest Istook On March 26, 2009 @ 9:35 am In International | Comments Disabled

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. [1] 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.” [2] 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. [3]

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.


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2009/03/26/is-government-now-a-bad-credit-risk/

URLs in this post:

[1] Wednesday’s effort to auction $24-billion in new U.S. government bonds met with resistance.: http://finance.yahoo.com/news/Stocks-slide-after-weak-apf-14744876.html

[2] “We cannot afford any more stimulus plans.”: http://www.independent.co.uk/news/uk/politics/bank-governor-warns-we-cannot-afford-any-more-stimulus-plans-1653411.html

[3] 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.: http://www.bloomberg.com/apps/news?pid=20601087&sid=aQGG.mWeZ4eU&refer=worldwide

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