They won't reduce America's AAA credit rating. To do so would be economic
suicide on a global scale, and the rating agencies know it. So many
companies and nations invest in American debt b/c it is seen as rock solid. ANY
change in that would see markets crumpling, the dollar folding and commodities
prices going through the roof. Investors would dump American debt like
yesterday's garbage and the consequences would echo around the globe.Its an economic cold war, and the ratings agencies are sitting on the button.
One press and its Armageddon. They all know it, and they won't do it.
No more "committees" or "commissions" to provide
"political cover!" THeir recommendations are always ignored
anyway.Our rating will be hurt if we just up our credit limit a few
trillion more with no obvious intention of ever being able to cut the deficit to
zero and at that point begin to pay off some of the $12-15 trillion accumulated
debt.The politicians need to do the right thing and make huge, bold,
permanent, programmatic changes in spending. And, do so from last year's (or a
much earlier date would be even better!) numbers, not the bloated baseline
projections for the future.Budget for 2012 should fund every
department at no greater than FY 2008 level, preferably less. Period!We are out of money, out of options and out of time.Cut, cap and
balance is the best we can do right now, so pass it, sign it and move on to
True enough, Jeff. I still maintain that if the members of Congress were forced
to tie their own lucrative government funded salaries and benefits to the
"pain" they expect the rest of us to suffer in the name of balancing
the budget, we'd have a solution to the debt crisis in no time.
"They won't reduce America's AAA credit rating. To do so would be economic
suicide on a global scale, and the rating agencies know it. "Um, DeltaFox, not sure why you think that the rating agencies should make a
special exception to spare the top credit rating for the U.S. if a downgrade is
indicated. Even though the rating agencies biffed in properly rating mortgages
prior to the implosion a few years ago, it doesn't mean they should deliberately
give the U.S. a pass on its burgeoning debt.The appropriate solution
is a combination of spending cuts and tax increases -- something that the
Democrats might not understand/acknowledge and the Republicans (especially the
Teabaggers) definitely don't.
Great suggestion Jeff and your points about calling reductions in increases cuts
is right on. Focus has to be on real cuts because rate increases, and exemption
modifications will not bring in the project revenue. They never do because
people adjust rather than pay. Thanks again for a great article
Re: DeltaFoxtrot | 1:50 p.m. July 26, 2011 Yes, they can and will
reduce America's credit rating. What else can you expect when we are facing a
crushing and ever increasing debt load? The comes a time when nations, just
like private citizens and corporations, will go bankrupt if they continue to
spend more than they make.
Obama ignored the recommendations of his own select committee. Why should we
believe that another committee's recommendations will be honored?
@ChuloDO & Rifleman: I guess you missed the 2nd part of my statement. There
have been multiple columns by multiple economists covering exactly what will
happen if the US loses its AAA credit rating. The consequences will be GLOBAL.
World markets are already shaken over Greece and that is a drop in the bucket
compared to the situation the US is in. We're on very very shaky ground here...
one little push turns this recession into a global depression that will set us
back 50 years economically.Think of it this way. The TARP program
was used to bail out banks and automakers because they were too big to fail. I
say the US is too big to fail and the people behind the scenes controlling the
markets know it. Greece hasn't even defaulted and their credit rating is now the
lowest of nations that are rated. I believe if any of the agencies were serious
about lowering America's rating they would have already done so... just b/c of
the risk of default.