Moody's warns US gov't on possible debt downgrade

[Vi-Jay 218]

Moody's warns US gov't on possible debt downgrade

Moody's warns US government on possible downgrade if no progress is made on debt ceiling

Marcy Gordon, AP Business Writer, On Thursday June 2, 2011, 4:04 pm EDT

WASHINGTON (AP) -- A credit rating agency is warning the U.S. government that it could lose its sterling debt rating if Congress and the Obama administration don't reach an agreement to raise the nation's borrowing limit.

Moody's Investors Service said Thursday that if the parties fail to make progress soon, it would put the U.S. rating under review for a possible downgrade. That's because there's a "very small but rising risk" that the government will default on its debts.

Standard & Poor's, another major credit rating agency, issued a similar warning in April.

The U.S. government hit its $14.3 trillion borrowing limit on May 16. The debt limit is the amount the government can borrow to help finance its operations.

A lower credit rating could ripple through the U.S. economy and ultimately hurt consumers. That's because many loans, including mortgages, tend to follow yields on U.S. Treasury bonds. So interest rates could rise.

Moody's also warned the government could face a downgrade if it fails to come up with a long-term plan to reduce the country's deficit. The federal budget deficit is on pace to exceed $1 trillion for the third straight year.

Moody's said it had expected strong political debate over the topic. But the entrenchment of both sides is greater than it anticipated.

President Barack Obama and Republicans both have said the country needs to reduce its annual deficits. But they are at odds over how to do it. Republicans insist cutting spending without tax increases. Democrats say any plan should include both.

Obama met privately with both parties this week to discuss the issue but no progress has been made.

Time is growing short. The Treasury Department has said the U.S. government is at risk of a default if it does not raise the borrowing limit by Aug. 2.

"The heightened polarization over the debt limit has increased the odds of a short-lived default" by the government, the rating agency said. "If this situation remains unchanged in coming weeks, Moody's will place the rating under review."

In April, Standard & Poor's for the first time lowered its long-term outlook for the government's fiscal health from "stable" to "negative." And it warned that it could strip the government of its top credit rating over the next two years if lawmakers failed to reach a deal to control the massive federal deficit.

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"The federal budget deficit is on pace to exceed $1 trillion for the third straight year."

Hmmmm. I wonder if there is a bar graph that might demonstrate that.

[Vi-Jay 218]

Here's one thru 2009.

Those bars went straight up right after...OM...got elected.

I will try find a more updated graph.

[Mr. Big Dog 10,747]

Here's your graph. It details nicely where the deficit comes from which should be a good indicator on how to fix it. The easiest way to fix the budget is for Congress to do NOTHING. No doc fixes, no extension of Bush era tax cuts, etc. Just do nothing and the budget will be balanced in less than 10 years. Much faster than under the Ryan Plan which doesn't really balance anything unless we are to believe that we will have a 2.4% unemployment rate and take at face value other such nonsensical assumptions which are needed to make Ryan's math work.

[Mr. Big Dog 10,747]

Those bars went straight up right after...OM...got elected the economy went to hell.

Fixed that for you since you apparently have a problem identifying the reason why the deficit exploded. The 2009 budget is one that Obama inherited. FY 2009 started a good month before the 2008 elections and almost 4 months prior to Obama actually taking office. Nice try pining that on him.

[Vi-Jay 218]

Nice try pining that on him.

I'm not pinning. I'm observing.

I'm very curious.

1) Why OM/ Biden are moving so slow negotiating budget cuts?

2) How long can they blame the economy for fiscal irresponsibility?

3) Perhaps OM knows that the press cannot continue the good news charade much longer.

Will use the GOP delay on raising the ceiling as a scapegoat?

Edited June 2, 2011 by Vi-Jay

[scandal 951]

I'm not pinning. I'm observing.

Your emoticon implies that you are doing a bit more editorializing and notjust 'observing':

Those bars went straight up right after...OM...got elected.

How about this? "Those bars went straight up right after ... Slovakia adopted the Euro as its currency.

Still want to talk about observation vs. causality?

1) Why OM/ Biden are moving so slow negotiating budget cuts?

They are?

[Mr. Big Dog 10,747]

Why OM/ Biden are moving so slow negotiating budget cuts?

The single largest contributor to the deficit and debt are the tax cuts enacted in 2001 and 2003 and extended for two years at the end of 2010. That being the case and seeing how federal revenue as a share of GDP has dropped to historic lows, it's not unreasonable to say that anyone seriously wanting to address the deficit would tackle the single largest contributor to that defict. Why is the GOP so blind to that very fact and so unwilling to bring the budget in order?

[Sc0tt28 26]

1) Why OM/ Biden are moving so slow negotiating budget cuts?

They are?

They claim that "nothing is off the table" and yet the budget was passed at the 11th hour (barely averting government shutdown) over funding for Planned Parenthood. So apparently, "nothing is off the table....except for PP".

[Mr. Big Dog 10,747]

Those bars went straight up right after...OM...got elected.

How about this? "Those bars went straight up right after ... Slovakia adopted the Euro as its currency.

Still want to talk about observation vs. causality?

[Mr. Big Dog 10,747]

They claim that "nothing is off the table" and yet the budget was passed at the 11th hour (barely averting government shutdown) over funding for Planned Parenthood. So apparently, "nothing is off the table....except for PP".

There's only one party that has taken one vital element to closing the budget gap (revenues) off the table and that's the GOP. Planned Parenthood - as much as you might be opposed to health services for women - is neither making nor breaking the budget. It's not even a drop in the bucket.

[Vi-Jay 218]

They claim that "nothing is off the table" and yet the budget was passed at the 11th hour (barely averting government shutdown) over funding for Planned Parenthood. So apparently, "nothing is off the table....except for PP".

An 11th hour that happened in April. Now it's June.

[scandal 951]

They claim that "nothing is off the table" and yet the budget was passed at the 11th hour (barely averting government shutdown) over funding for Planned Parenthood. So apparently, "nothing is off the table....except for PP".

You are talking about the 2011 Budget negotiations.

This thread is about the urgent need to raise the debt ceiling before we default and harm the credit rating of the US government.

You are not even on topic, let alone factually correct.

Republicans are insisting upon a linkage of that (normally routine) procedure to FUTURE commitments for debt reduction. A linkage that has never been made previously in the long US history of a legislated mandatory debt ceiling. And yet, Democrats, including the President, have been willing to negotiate such a linkage with Republicans in the interest of resolving the urgent ceiling increase, and because we all understand that debt reduction is necessary (even if the linkage is not). Yet, despite this good faith on the part of Democrats, they are labeled as "slow movers" by their perennial critics.

[Zero Sum 305]

More dammed if they don't, dammed if they do. I can tell next year is an election year.

[Vi-Jay 218]

Your emoticon implies that you are doing a bit more editorializing and notjust 'observing':

Have you ever let out a soft whistle when amazed?

I propose VJ elect you "Emoticon Moderator". (say it with echoes. More impressive)

(that whistle was sarcastic )

How about this? "Those bars went straight up right after ... Slovakia adopted the Euro as its currency.

Still want to talk about observation vs. causality?

Your best argument is nonsense?

That's obviously discourteous and obnoxious.

They are?

See post #11.

Edited June 2, 2011 by Vi-Jay

[Vi-Jay 218]

You are talking about the 2011 Budget negotiations.

This thread is about the urgent need to raise the debt ceiling before we default and harm the credit rating of the US government.

You are not even on topic, let alone factually correct.

Republicans are insisting upon a linkage of that (normally routine) procedure to FUTURE commitments for debt reduction. A linkage that has never been made previously in the long US history of a legislated mandatory debt ceiling. And yet, Democrats, including the President, have been willing to negotiate such a linkage with Republicans in the interest of resolving the urgent ceiling increase, and because we all understand that debt reduction is necessary (even if the linkage is not). Yet, despite this good faith on the part of Democrats, they are labeled as "slow movers" by their perennial critics.

Others may feel free to navigate the thread at poster discretion.

but, Poster Beware! Emoticon's are being scrutinized!