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  • McConnell-Reid "Just Borrow More" Plan Fails to Cut Spending and Degrades America's Creditworthiness

    Any Senator foolish enough to think the McConnell-Reid “Just Borrow More” Plan solves the debt ceiling problem should look again at what the Moody’s debt rating service said.  The McConnell-Reid Plan simply hikes the debt ceiling so the government can borrow more money, with a commission thrown in, to meet in the future to recommend to Congress spending cuts that may or may not ever be enacted.  The Moody’s rating service called for real action to drive down federal deficits, but the McConnell-Reid Plan provides none.

    The Moody’s statement of July 13 placed the AAA bond rating of U.S. debt on review for possible downgrade. Moody’s focused on two concerns:  (1) the Treasury could run out of money to pay its obligations if Congress does not timely enact a law authorizing the government to borrow more money, and (2) even if such a law is timely enacted, it might not include credible deficit reduction.  Members of Congress and the press focused lots of attention on the first Moody’s concern — a Treasury temporarily unable to pay some of its bills — but failed to focus on the second concern — insufficient deficit reduction.

    Moody’s said that, even if a law is enacted to raise the debt limit, “the outlook assigned at that time to the government bond rating would very likely be changed to negative at the conclusion of the review unless substantial and credible agreement is achieved on a budget that includes long-term deficit reduction.”  The McConnell-Reid Plan gets nowhere near meeting the Moody’s test of “substantial and credible agreement . . . on a budget that includes long-term deficit reduction.”  Its enactment would do nothing to reduce federal spending and would substantially increase federal borrowing.  The “Just Borrow More” Plan digs America deeper and deeper into the hole.

    Since the McConnell-Reid “Just Borrow More” Plan flunks the Moody’s test, Moody’s can be expected to downgrade the U.S. AAA bond rating if the Plan becomes law.  When Moody’s drops the rating, the markets will force the government to pay higher interest rates to borrow money.  The McConnell-Reid Plan forces America to borrow more, and as a result forces America to pay more for that “privilege.”

    From a political perspective, it is easy to understand why Senator Reid supports the Plan — after all, he is following the lead of the head of his Party, President Obama, whose Administration, when faced with the Cut, Cap and Balance spending cut legislation (H.R. 2560) that was a step in the right direction, said the President would veto it.  But it is impossible to understand why Senator McConnell supports the “Just Borrow More” Plan.  As one of the top two leaders of the Republican Party, surely he has some respect for his Party’s platform, which proclaimed that “Republicans will attack wasteful Washington spending immediately.”

    Congress should not raise the debt limit without getting spending under control.  Debt limit legislation should put America on the path to driving down federal spending and borrowing, while preserving our ability to protect America, and without raising taxes.  Conservatives should stop the McConnell-Reid Plan.  Don’t “just borrow more.”

    Related Posts:

    Shame on the Politically Motivated McConnell Plan to Hike Borrowing With No Spending Cuts

    What Moody’s Really Told Boehner and Obama about the Debt Ceiling

    Posted in Economics [slideshow_deploy]

    6 Responses to McConnell-Reid "Just Borrow More" Plan Fails to Cut Spending and Degrades America's Creditworthiness

    1. Mad Max II says:

      Wake up people. You can't put humpty dumpty back together again. We need a new vision for America or prepare for disaster. I know you feel it. If you are an American, Read "Common Sense 3.1"

      FIGHT THE CAUSE – NOT THE SYMPTOM
      OsiXs (Revolution 2.0)

    2. Pingback: Liberals Invoke Reagan to Sell Debt Deal

    3. carol,az says:

      The duality of McConnell / Reid is just another diversion for the Prince of deceit.
      The warning alarms have been going on for 14 months.
      Yes Moody and other finance institutions along with the stock market index have been for warning us for months…… WE CAN"T RUN A COUNTRY ON CREDIT!
      The Health Care Program money stolen by the Princes of Deceit, must be refunded back into our coffers.
      I also found the interview aired last night by Mr Wynn also insightful.
      He stated that the current leadership is very anti-Buss, he and Buss. are afraid to expand and hire within, because of the inability of our leadership to stabilize our economy, comparing it to Socialism.
      Lest we forgot Mr Wynn, you help to get Harry Reid reelected.

    4. Lin Hodges says:

      If Bush drove us into the "ditch" as Mr. Obama is fond of saying, Obama has drove us over the "Grand Canyon." I can't understand how Mitch Mcconnell could promote giving Obama the power to increase the debt limit that belongs to Congress. Congress should vote to take away Obama's reckless spending habit with the Cut, Cap and Balance bill.

    5. Pingback: It’s the Spending, Stupid | Suffolk County Liberty Report

    6. Pingback: Morning Bell: Liberals Force Choice Between Economic and National Security

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