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  • Obama Pushes U.S. Credit Rating Below France

    On Tuesday, February 2, President Obama released his budget forecasting a deficit for 2010 of $1.6 trillion for the year and $9.1 trillion from 2010 through 2020. The next day the Moody’s credit rating agency announced Obama’s budget policies were so profligate and irresponsible as to risk the credit rating of the federal government. The United State has long been recognized as the best credit risk in the world, with a rating of Aaa on Moody’s scale. Obama’s fiscal policies may “test the Aaa boundaries” according to Moody’s, as it shaded the U.S. government ratings now below those of Canada, Germany, and even France.

    The source of massive budgetary shortfall is not a shortage of revenues. Obama projects federal receipts will once again be above their modern average of about 18.4 percent by 2013, rising to almost 20 percent by 2020. Near- and medium-term deficits arise because Obama saw Washington’s excess spending in recent years and decided to double down. Under his budget, federal spending rises by $1.7 trillion over 10 years.

    Worse, these medium-run deficits but segue to America’s long-standing, long-run fiscal disaster known as Social Security, Medicare, and Medicaid. With promised benefits exceeding the programs’ dedicated revenues by many tens of trillions of dollars the President has boldly called for the creation of yet another toothless, partisan budget commission. As Senator Dorgan (D-ND), Chairman of the Budget Committee so aptly expressed at a committee hearing on the Budget, when it comes to controlling long-term costs, “I don’t see the focus. I don’t see the pivot”. Dorgan announced his retirement from the Senate the same day Moody’s issue its warning.

    The consequences of Obama’s profligacy will be felt some time in the future. For now, markets understand the United States has plenty of time to change course, and apparently assume it will do so. Hopefully, they are right. If and when markets come to believe the U.S. intends to continue to spend irresponsibly now and indefinitely, the reaction will be swift and painful in terms of much higher interest rates on U.S. government debt and throughout the economy. Debt is always a pay now or pay later proposition. If Obama impairs the U.S. government’s credit rating as his budget proposal threatens, paying later will get a lot more expensive.

    Posted in Economics [slideshow_deploy]

    4 Responses to Obama Pushes U.S. Credit Rating Below France

    1. Bobbie Jay says:

      please, this man is not working in the best interest of America. whoever has authority needs to recognize this and stop it immediately! When he's in the public eye and he speaks of "we need to," he is a hypocrite to. Whenever he says "I:" it's in such a broad text he's protected either way. America needs to get back on her feet and this man is doing everything he can to cripple her!

    2. AZ_VET says:

      It's too bad Congress can't keep its sticky fingers out of the cookie jar. If our spendthrift friends in spin city east had not borrowed from Social Security and stuffed it with white paper IOU'S, we wouldn't be in such straits. For years the Social Security fund was listed as an asset in previous budgets. Not an acceptable accounting practice. It does nothing more than understate the real deficit.

      If memory serves, those borrowed funds have never been replaced. No wonder its suffering and should go bottom up in 2014 or thereabouts.

      What really is surprising is that we have any international credit rating. We're broke, our paper money is in the cellar, and our bottom feeders in Disneyland east just can't stop spending. If current accounting practices were applied to our congress, they would all be in jail for fraud and misappropriation of government funds(our tax dollars)

      Let me give several ideas for budget cuts: End foreign aid, grants ,and outright gifts to foreign countries and groups(Hammas, PLO, etc). Reduce the number of Embassies and leave consular offices instead, cut out junkets by the congress, specifically pelosi and her crowd, cut government pay by 20% especially in the congress. Reduce congressional staffs – one secretary, one researcher. Close governmental agencies that no longer perform a function(usaid) That agency is quite responsible for companies locating to foreign soil. Trim the stateless department. Cut back on federal holidays with pay to all government employees. deny benefits to illegal aliens, cease any donations, grants, and gifts to Foundations, cair, splc, acorn, etc. Cut out farm subsidies and any other subsidies currently in force. Be realistic with student loans, Pell, and outright grants to students. They must pay the money back(no free rides). The list goes on.

      If I remember correctly, a bill was passed some years back that the budget had to be balanced in x number of years. Is congress in violation of law, or are they just ignoring it?

    3. Carl in Washington, says:

      WHY OBAMA MUST BE IMPEACHED

      By Lyndon H. LaRouche, Jr.

      February 3, 2010 (LPAC)— President Barack Obama's stated intention, to shut down and destroy the NASA program at its root, when added to the Hitler-like health-care policy, and the general, destructive features of all other leading Obama policies, is one step too far to bear. There is no longer room on this planet for a United States and a President Obama to occupy the same space.

      The need for Obama's ouster, either by resignation or impeachment is now an existential issue for both our republic and the welfare of the planet generally.

      Since the founding of our republic, the existence of our nation has depended upon surges of science-driven and related increases of the productive powers of labor, per capita, and per square kilometer of our territory. Now, especially since the reign of former President George W. Bush, Jr., and now that of Obama, the very means, of science and technology, by which the existence of our republic had formerly prospered, have been destroyed, step, by step, by step. Our industries have gone, the security of our food supplies has been undermined, and now the last bastion of the means of technological progress, the space program, is scheduled for obliteration.

      Simply, the time has come, that President Obama must go, either by his own choice, or ours. The intention of our Federal Constitution demands this.

    4. Keith Gessen says:

      Hi, I came across this while doing a news search for Moody's. The headline is a lie, as you of course know. Moody's has issued a warning (which is bad enough!); but it has not in fact downgraded the credit rating. Whereas the headline states that the credit rating has already been downgraded. I think you should consider changing it. –Keith

    5. davey says:

      It's ridiculous today we find out that Social Security is taking in less than it is spending, of course the libs are not worry because it's trust fund invests in US Treasury Bonds…right…and the treasury actually has money right now? Obamination is the word for our current whitehouse and congress.

      Fixing this stuff isn't hard, forgive my crude numbers to follow, but it's simple budgeting.

      How about a new law, the goverment must not budget more than the average of the previous 4 years income not to exceed more than 3% of the previous years budget or previous years income and not to exceed more than 97% of the current years expected income. Government's entire budget including all supplimentals must not exceed 20% of GDP, and must go down by 1% of GDP per year until it reached 15% of GDP.

      Until govment spending is below 15% of GDP, All new govment agencies and all increases in workforce beyond 3% per year must be approved by a 2/3rds majority vote of the country. All unionized governmental workforce contract must be approved by a 2/3rds majority vote of the congress including senate and all state governors. All budget reconciliation related laws will be repealed until such time government spending is below 15% of GSP.

      No amendment to a bill in congress, budgetary or not, may be recognised if said bill is not directly related to the originating bill by subject. No amendment to budget related bills OMNIBUS or other may directly target the budget to act in bennefit of a single state without a 2/3rds vote. All govertment anual state payouts, for any reason, will be removed from the federal budget, taxes lowered and laws relealed accordingly. If the state needs money it should control it's own taxes.

      To change this law requires a 2/3rds majority vote by the country.

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