Thursday, July 14, 2011
As I noted yesterday, America could default even if the debt ceiling is raised.
One of the big, government-sponsored American rating agencies has just confirmed my post.
Specifically, Standard & Poor's announced today:
[We're putting U.S. debt on] CreditWatch with negative implications ... owing to the dynamics of the political debate on the debt ceiling, there is at least a one-in-two likelihood that we could lower the long-term rating on the U.S. within the next 90 days ....
The political debate about the U.S.’ fiscal stance and the related issue of the U.S. government debt ceiling has, in our view, only become more entangled.
We may lower the long-term rating on the U.S. by one or more notches into the 'AA' category in the next three months, if we conclude that Congress and the Administration have not achieved a credible solution to the rising U.S. government debt burden and are not likely to achieve one in the foreseeable future.
The Washington Post adds:
S&P managing director John Chambers said in an interview ... even if the parties agree to raise the debt ceiling, it may not be enough to avert a downgrade. Chambers said the country must implement a plan to reduce the annual budget deficit by roughly $4 trillion over 10 years, which makes the debt manageable over the long term.
The White House and Congress have discussed a plan that big, but negotiations have more recently centered on a smaller deal, at $2 trillion or less.
“That could still lead to a downgrade,” Chambers said.
Knee-jerk conservatives may say, "yes, we have to slash all social support programs like unemployment benefits and food stamps".
Knee-jerk liberals might say "raise taxes instead of cutting any spending".
And stopping bailouts and giveaways for the top .1% of the richest elite (which weaken rather than strengthen the economy, as shown here, here and here) and slashing spending on unnecessary imperial wars (which reduce rather than increase our national security, as demonstrated here and here) is what the budget really needs.
As I wrote last year:
I pointed out the next month:
Why aren't our government "leaders" talking about slashing the military-industrial complex, which is ruining our economy with unnecessary imperial adventures?
And why aren't they taking away the power to create credit from the private banking giants - which is costing our economy trillions of dollars (and is leading to a decrease in loans to the little guy) - and give it back to the states?If we did these things, we wouldn't have to raise taxes or cut core services to the American people.
If there's any shortfall, all we have to do is claw back the ill-gotten gains from the fraudsters working for the too big to fails whose unlawful actions got us into this mess in the first place. See this, this, this, this and this.