Next Time They Shoot To Kill

Isn’t having Obama as President awesome? Because Obama still insists on raising taxes in a slow economy, something everybody knows would never pass the House of Representatives, the United States is in danger of losing its AAA credit rating. No one can say we haven’t had an impossible to miss or misinterpret warning shot fired across our bow.

U.S. Debt Rating Placed on Review for Downgrade by Moody’s as Talks Stall

Moody’s Investors Service raised the pressure on U.S. lawmakers to increase the government’s $14.3 trillion debt limit by placing the nation’s credit rating under review for a downgrade.

The U.S., rated Aaa since 1917, was put on review for the first time since 1996 on concern the debt threshold won’t be raised in time to prevent a missed interest or principal payment on outstanding bonds and notes, even though the risk remains low, Moody’s said in a statement yesterday. The rating may be reduced to the Aa range, and there is no assurance Moody’s would restore its top rating, even if a default is quickly “cured.”

See also:
Moody’s May Downgrade U.S. Debt, If Crisis Isn’t Resolved
Moody’s: If U.S. Misses Debt Payment, Rating Could Be Cut Next Day
Moody’s moves on US credit rating
Moody’s puts debt rating on review
Moody’s downgrade threat adds to US woes
Moody’s considers downgrading U.S. credit rating
Moody’s Puts U.S. AAA Credit Rating at Risk of Downgrade
US debt crunch: A nation taken to the limit
Reports: S&P Says U.S. Rating Could Be Downgraded If It Misses Any Payments
Cost of Protecting U.S. Debt Rises on Moody’s Action

Boy oh boy, you think we have a debt problem now? Just watch what happens if our debt rating gets cut. It will immediately become more expensive to borrow money, thus compounding our already beyond serious debt woes, a self inflicted wound, like tasering ourselves in the neck. Obama needs to drop his, non starter in the House, tax increase obsession and get on with increasing the debt ceiling. You know, if Obama wanted to intentionally destroy the U.S. economy, he couldn’t be doing a better job. Is he the President or an enemy of the United States?

/if you’re ever wondering what Obama might be thinking of regarding U.S. economic policy, just ask yourself, what would Vladimir Putin do (WWVPD)?

Running On Empty

Actually, we’re running beyond empty now. The United States can’t legally borrow any more money until Congress acts to raise the debt ceiling.

US government hits debt ceiling, lighting 11-week fuse

Treasury Secretary Timothy Geithner informed Congress on Monday that the United States has reached its legal debt limit, setting off a ticking time bomb that could explode in less than three months if lawmakers can’t bridge differences and allow more government borrowing.

In hitting the $14.3 trillion debt ceiling – the limit on how much the government can borrow – the Obama administration on Monday began temporarily halting payments to the retirement and federal pension accounts of federal workers and started borrowing from those funds, to be restored later.

Geithner sent a letter to Senate Majority Leader Harry Reid, D-Nev., warning that the government can move money around for about 11 weeks but if a new debt ceiling isn’t agreed to by Aug. 2, the U.S. government could effectively default on its obligations to its creditors. He warned of “catastrophic economic consequences for citizens” unless Congress raises the debt ceiling.

An increase of about $2 trillion is expected, enough to get the issue past the 2012 elections before Congress would have to lift it again.

Republicans who control the House of Representatives vow to link raising the debt ceiling to cuts in government spending of at least equal measure. In a combative statement Monday, House Speaker John Boehner, R-Ohio, upped the ante.

“As I have said numerous times, there will be no debt limit increase without serious budget reforms and significant spending cuts, cuts that are greater than any increase in the debt limit.” Boehner has called previously for $2 trillion in spending cuts as part of any deal to raise the debt ceiling.

See also:
US hits $14 trillion debt limit
US Hits Debt Ceiling, But Treasury Market Rules Out Default For Now
Deja Vu, But No Disaster: U.S. Government Hits Debt Ceiling
U.S. Hits Debt Limit, Sky Doesn’t Fall
U.S. hit debt limit today
Treasury Tapping Federal Retirement Accounts to Stave Off Default
Turbo Tim Raids Pension Plans
With Debt Limit Maxed Out, Lawmakers Hold Firm On Remedy
Rep. Jordan: U.S. won’t default if debt ceiling isn’t raised
U.S. National Debt Clock

Well, we hit the debt ceiling and, despite all the Democrat Chicken Little hysteria, the Sun didn’t explode, the seas didn’t boil, and the markets didn’t plunge thousands of points. Go figure.

/all I can say is that the Republicans had better stand firm and hold their ground this time and hold out for concrete, verifiable spending cuts that at least equal the amount of any debt limit increase

Read The Writing On The Wall

The numbers are big but the math is fairly simple, the United States is in deep financial trouble, we’re digging the hole deeper, and no one in Washington is even thinking about putting down the shovel.

Taking the National Debt Seriously

As of Sept. 30, 2009, the national debt was almost $12 trillion and interest on that debt was $383 billion for the year, according to the Treasury Department’s Bureau of the Public Debt. The Congressional Budget Office on Oct. 7 estimated the 2009 budget deficit to be almost $1.4 trillion (about 10% of GDP). In August, the White House Office of Management and Budget (OMB) estimated total government revenues at about $2 trillion. The revenue estimate included $904 billion from individual income taxes. This means the cost of interest on the debt represented more than 40 cents of every dollar that came in from individual income taxes.

Except for a few years in the late 1990s, for decades Washington has spent more than it has taken in each year and borrowed the rest. Taxpayer dollars that could have paid off debt each year have instead been spent on interest to finance debt. Unfortunately, that’s a vicious cycle that will likely only get worse.

The OMB projects deficits of about $9 trillion over the next 10 years. If that occurs, the national debt will be almost $21 trillion by 2019. However, the actual amount could be much higher. The OMB also optimistically projects $13.5 trillion of revenue increases over the next decade, while minimizing the inevitable rise in interest rates that will come with an expanding national debt.

During Jimmy Carter’s years in the White House, Treasury yields reached 15%. The 2009 average interest rate on the debt was only 3.2%. With our mounting national debt and budget deficits, it is reasonable to assume that in the near future interest rates on new and refinanced debt could double or triple.

In stark but simple terms, unless Americans are made aware of this financial crisis and demand accountability, the very fabric of our society will be destroyed. Interest rates and interest costs will soar and government revenues will be devoured by interest on the national debt. Eventually, most of what we spend on Social Security, Medicare, education, national defense and much more may have to come from new borrowing, if such funding can be obtained. Left unchecked, this destructive deficit-debt cycle will leave the White House and Congress with either having to default on the national debt or instruct the Treasury to run the printing presses into a policy of hyperinflation.

See also:
US National Debt Clock
Let’s Play Hypocrisy Or Incredibly Shameless Hypocrisy?
Obama’s $2 Trillion Friday Night Dump
Setting Records
You’d Better Sit Down, I’ve Got Some Bad News
Thank You President Obvious
File Under: No [Expletive Deleted] Sherlock!
Money Doesn’t Grow On Trees
Spending Like A Drunken Sailor On Crack

/hey, I know, let’s spend a couple trillion more on health care “reform”, cripple the economy with cap and trade, and, oh, how about a second “stimulus”?