I agree with the laser like focus here: this is about Congress doing their damned job and anything else is just distracting blabber. I’m normally a Paul Krugman fan, but I really don’t like the shiny bauble he threw in front of the press because they are just going to obsess over the coin idea now and lose focus of the real story.
Downgrades will cause us to refinance at higher interest rate levels which is an automatic increase to the deficit. The Tea Party continues to dump on the middle class. Congress is responsible for the budget, and if there are cuts to be made and taxes to be raised then they must do so. Time for the goldbricking, flame-deflecting rantmeisters in the tea party to step up and do their damned job or shut up, resign, and go home.
Credit rating agency Egan-Jones has cut the United States’ top credit ranking, citing concerns over the country’s high debt load and the difficulty the government faces in significantly reducing spending.
The agency said the action, which cut U.S. sovereign debt to the second-highest rating, was not based on fears over the country not raising its debt ceiling.
Instead, the cut is due the U.S. debt load standing at more than 100 percent of its gross domestic product. This compares with Canada, for example, which has a debt-to-GDP ratio of 35 percent, Egan-Jones said in a report sent on Saturday.
Lawmakers in Washington are seeking to agree on spending cuts before raising the country’s debt ceiling, with five days remaining before President Obama’s deadline for a deal.
Treasury Secretary Timothy Geithner made an appeal Thursday to House Republican freshmen, a group of lawmakers skeptical of his warning that a failure by Congress to raise the nation’s borrowing limit would have grim financial and economic consequences.
Geithner came armed with fresh evidence of Wall Street’s increasing pessimism over prospects for a quick resolution to the standoff over government debt. Moody’s Investors Service, the debt-rating agency, said it would consider downgrading the U.S. credit rating if it did not see progress in negotiations by mid-July.
Moody’s had expected “political wrangling” over the issue, the firm said. But it added: “The degree of entrenchment into conflicting positions has exceeded expectations. The heightened polarization over the debt limit has increased the odds of a short-lived default.”
The government reached its borrowing limit of nearly $14.3 trillion May 16. Treasury officials have said they can use a series of maneuvers to continue most government functions until early August but would face a default on federal obligations leading to likely economic upheaval.