On Friday evening, Standard & Poor’s (S&P) downgraded the U.S. credit rating from AAA to AA+. As we and other conservatives warned, the spending reductions in the deal negotiated by President Obama to raise the debt ceiling were inadequate, and S&P reacted as we predicted but sooner. Neither Moody’s nor Fitch, two other rating agencies, have downgraded federal debt yet, but they are not providing much rosier outlooks. Decades of over-spending and over-borrowing by the federal government have damaged America’s creditworthiness. Congress after Congress, President after President, the federal government …
The U.S. Treasury Department came out today with its Debt Position and Activity Report for July. The news is bleak. With the additional $238 billion the Treasury immediately borrowed when the debt ceiling was raised on August 2, total current debt now exceeds 2010 gross domestic product (GDP) for the entire United States. Debt at these levels is why Moody’s and Standard & Poor’s is concerned enough to be considering a downgrade of their credit ratings on U.S. debt. Debt as of July 31 totaled $14.342 trillion. That was made …
May 21, 2011, was supposed to be Judgment Day according to Harold Camping. It was, in a sense. As the day came and went, the world judged that Camping’s 15 minutes of fame were up. Treasury Secretary Tim Geithner may yet learn something from Camping. Geithner has been a whirlwind of worry about the nation defaulting in the event Congress fails to raise the debt ceiling. It is interesting, therefore, that the market for U.S. debt—where the default would occur—remains sanguine about the debt ceiling debate and dismissive of Geithner’s …
America’s current predicament is that it borrows money from countries or individuals to finance many of its expensive obligations, including financing the $862 billion stimulus bill as well as the wars in Iraq and Afghanistan. But what would happen if America had to pay higher interest rates on all future borrowing? This is the question that some people in the federal government have to ponder, as influential rating agencies such as Standard & Poor’s and Moody’s have both recently voiced their view that America’s AAA rating is not guaranteed or …
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 …
The bailout parade is continuing unabated in Washington this week. On the heels of a $25 billion bailout for the automotive industry, the Bush Administration agreed yesterday to a $4.3 billion bailout of Massachusetts’ out of control health care spending. Apparently when numbers like $700 billion are being thrown around, numbers like $25 billion and $4 billion begin to sound like chump change. These “crises” all share one thing in common: they all could have been avoided if our politicians made relatively small but unpopular decisions today to avert disaster …
