Moody's offers different view on debt limit
One of the nation’s top credit-rating agencies says that the U.S. Treasury Department is likely to continue paying interest on the government’s debt even if Congress fails to lift the limit on borrowing next week, preserving the nation’s sterling AAA credit rating.
In a memo being circulated on Capitol Hill Wednesday, Moody’s Investors Service offers “answers to frequently asked questions” about the government shutdown, now in its second week, and the federal debt limit. President Obama has said that, unless Congress acts to raise the $16.7 trillion limit by next Thursday, the nation will be at risk of default.
Not so, Moody’s says in the memo dated Oct. 7.
” We believe the government would continue to pay interest and principal on its debt even in the event that the debt limit is not raised, leaving its creditworthiness intact,” the memo says. “The debt limit restricts government expenditures to the amount of its incoming revenues; it does not prohibit the government from servicing its debt. There is no direct connection between the debt limit (actually the exhaustion of the Treasury’s extraordinary measures to raise funds) and a default.
The memo offers a starkly different view of the consequences of congressional inaction on the debt limit than is held by the White House, many policymakers and other financial analysts. During a press conference at the White House Tuesday, Obama said missing the Oct. 17 deadline would invite “economic chaos.”
The Moody’s memo goes on to argue that the situation is actually much less serious than in 2011, when the nation last faced a pitched battle over the debt limit.
“The budget deficit was considerably larger in 2011 than it is currently, so the magnitude of the necessary spending cuts needed after 17 October is lower now than it was then,” the memo says.
Treasury Department officials did not immediately respond to requests for comment.
- therock18
- 10-09-2013, 06:06 PM
- therock18
- 10-09-2013, 10:13 PM
bump
- LexusLover
- 10-10-2013, 06:10 AM
Even so reported on CNN. The over the cliff scare tactics ...
........ are being neutralized by the truth. Go figure.
........ are being neutralized by the truth. Go figure.
- gnadfly
- 10-10-2013, 06:34 AM
Scare words will be used until the bleeting stops.
Those people can be identified by insisting on using the word "shutdown" when 83% of the govt is still functioning and "successful" when only a handful of people out of 30 million can sign up for the President's Healthcare plan.
Those people can be identified by insisting on using the word "shutdown" when 83% of the govt is still functioning and "successful" when only a handful of people out of 30 million can sign up for the President's Healthcare plan.
- LexusLover
- 10-10-2013, 06:49 AM
Scare words will be used until the bleeting stops.Obaminable's support is fading quickly ....
Those people can be identified by insisting on using the word "shutdown" when 83% of the govt is still functioning and "successful" when only a handful of people out of 30 million can sign up for the President's Healthcare plan. Originally Posted by gnadfly
.... in the face of the media identifying "selective" shutdowns and his inconsistencies.
The scare tactics only work if there is an immediate (or at least quick) reaction to them.
You saw how quickly Syria coughed up the WMD's!!!! The World sees through him.
His supportive media is now using the word ... "backfire"!
The result of all the "scary" media blitz will be that the rank-in-file CITIZEN will realize that life goes on without the Federal Government ...
.... BECAUSE he said it was SHUTDOWN! (Just like "I'm gonna fire missiles!")
When folks realize the "snake oil" doesn't cure, but is detrimental, things will turn bad.