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Moody’s Wants US To Eliminate Debt Ceiling Altogether

July 19, 2011 by  

Moody’s Wants US To Eliminate Debt Ceiling Altogether

Many groups have floated ideas to end the United States’ debt ceiling debate, and the credit rating agency Moody’s recently weighed in with its own plan: simply eliminate the debt ceiling.

In a report written by Moody’s analyst Steven Hess issued Monday, the credit rating agency said the plan put forth by Senators Mitch McConnell (R-Ky.) and Harry Reid (D-Nev.) “would be a positive step in the short term,” but “(w)ithout more substantial deficit reductions being included in such a plan, it would be negative for the long-term outlook,” reported an article on CNN.com.

The McConnell/Reid plan, often touted as a “backup” measure should the debt talks fail, “would allow for three short-term increases of the debt ceiling while at the same time letting lawmakers register their disapproval. The first increase would boost the debt limit by $700 billion and the next two by $900 billion each,” the article read.

“We would reduce our assessment of event risk if the government changed its framework for managing government debt to lessen or eliminate that uncertainty,” the Moody’s report read, according to CNBC.com. Last week, the agency threatened to downgrade the United States’ AAA credit rating if the Federal government cannot pay its debts.

The Moody’s report noted that other countries do not have debt limits: “Elsewhere, the level of deficits is constrained by a ‘fiscal rule,’ which means the rise in debt is constrained though not technically limited.”

The U.S. debt ceiling “has not effectively restrained spending, Moody’s notes, and the legislative process ‘creates periodic uncertainty over the government’s ability to meet its obligations,’” the CNN.com article read.

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  • DanB

    Some of their analysis is correct.

    ‘The U.S. debt ceiling “has not effectively restrained spending, Moody’s notes, and the legislative process ‘creates periodic uncertainty over the government’s ability to meet its obligations’

    ‘the plan put forth by Senators Mitch McConnell (R-Ky.) and Harry Reid (D-Nev.) “would be a positive step in the short term,” but “(w)ithout more substantial deficit reductions being included in such a plan, it would be negative for the long-term outlook,”’

    Hmm, I wonder why these statements would be true. Because we have a spending problem! Eliminating the debt ceiling will fix this? What idiot came up with that idea? Oh, because other countries don’t have a debt ceiling? Let me see, other countries are defaulting right now or at risk of it as well. Some are not. It has nothing to do with their debt ceilings or lack thereof. It has to do with their spending. If you are honest about America’s spending problem, then you MUST downgrade our credit rating. We have a spending problem and until that is fixed you know that America is going to default–whether by defacto through inflation of our currency with which the debts are paid or through a straight default. Either way it is the same. The only difference is when we default. If the debt ceiling is eliminated, then we just keep racking up the credit bill for now and default is postponed. Our credit rating might be preserved but only as long as we are able to keep making our payments. Eventually the payments will take over our economy and we will be forced eventually to literally sell our lands, our people, and our resources to our creditors.

    • wandamurline

      Cut Cap and Balance…this government needs a balanced budget amendment to send to the states as every state in America must pass a balanced budget every year…while the feds just print more money. This government needs to look into dismantling a bunch of their non-essential departments and that would probably save enough money to operate the government for months. The spending and borrowing must stop. This is not rocket science…if you go to a credit counselor, the first thing they do is cut up your credit cards, they look and income versus expenses, consolidate what they can, and put you on a budget with no more borrowing allowed. Maybe we should send a few credit counselors to Washington as their “economists” don’t know what they are doing.

    • herman hootenholler

      i see right thru this…it’s just a cop out by moody’s & maybe the other credit rating agencies & the pols. do they think there’s no consequence of continually creating fiat currency? just a bunch of gutless wonders.

      i suppose the credit rating agencies are no longer going to rate the risk of when the gravy train stops. they’ve lost all credability, as far as i’m concerned. how can i trust or depend on them to do the courageous things in order i can price risk?

      this whole thing sounds so european uniony.

    • http://?? Joe H.

      How about we do away with MOODIES??????

      • GregS

        I’m all for that!!!

  • Greg T

    Once again, if you don’t get the test scores you want…blame the test.

    Interesting enough that Steven Hess wants to eliminate the debt ceiling while still wanting deficit reductions. Sorry to bust your bubble but talking seriously about deficit reduction rarely occurs outside of when we have to deal with raising the debt ceiling.

    These threats of government shut down are difficult, but not dealing with runaway government spending will lead to default like that of Greece. Do the responsible thing and stop blaming the wrong tool. It is not the debt ceiling that is the problem. It is leadership’s failure to deal with over speeding.

    • wandamurline

      As our forefathers said…let it happen on my watch instead of my children’s watch…in other words, let’s end this charade now instead of kicking the can down to the next generation. I believe that this generation is capable of handling it and I feel like I am the last stand to insure my grandkids don’t have to deal with this. One way or another, the debt ceiling should not be raised and if raised, should be complemented with trillions of spending cuts and these cuts should be in the government, and not our soldiers. There has to be some changes to SS, MA and MC, but the real cuts should be in the government size and scope first.

      • Penny R. Freeman

        Right on wandamurline! If my father’s generation could face down Hitler for the sake of Europe (who’ve never seemed to me to be grateful)and our freedom, why can’t we force the corrupt politicians in D.C. to respect us and the Constitution or GET OUT!? I think about everybody in this country is so sick of hearing this blame game by our partisan politicians they’re ready to boot them all out. I know I am. I usually vote Republican, but am now a Tea Party member. I think the Tea Party has been a force for good and has helped to shine the spotlight on the corruption and waste in our government. But I’m so sick of the establishment D.C. attitude of both parties I’m hoping the public will give ALL of them the boot. We sent a message to D.C. in the last election to either wake up or get out, but apparently our leaders are tone deaf. Moody you’re dead wrong. No debt ceiling? I guess they want us in the pile of bankrupt countries with Greece. Get rid of the overlapping responsibilities of agencies. Somebody in the news showed how wasteful the overlap of agencies can be. The example was imported fish. Just to get that food item to your table took the review by THREE government agencies! And where is it stated in our Constitution that the federal government has the right to mandate WHAT you buy or EAT? The control of our schools is a local responsibility not a federal one. The Departmnet of education is one agency that can be eliminated totally! Why do we allow the EPA to dictate how we can use our natural resources? They’re bureaucrats who have no right to destroy people’s property rights and force businesses out of business because some little fish or miniature lizard species might be exterminated! Do you really think by using solar or wind power instead of fossil fuel generated power we will make a dent in the temperature of the planet? If you do then explain how you can convince other countries to follow our lead. You won’t be able to! And who said overpriced, dangerous to use, and more shortlived than the manufacturer’s claim light bulbs will actually reduce energy consumption? What that did was send even more jobs to China and now the former CEO of GE, the principle manufacturer of those horrendous bulbs, has a nice cushy seat on Obama’s jobs advisory board! I think I smell a rat in that one. And let’s not forget Al Gore whose movie that made global warming such an issue and gained him a fortune. He certainly is a green energy person. I don’t remember the exact number, but the house he had built after he accumulated his fortune burns more energy in one day than several houses! A true greenie wouldn’t you say?! Why do we keep falling for the lies from D.C.? Why can’t we stand united and force out leadership to tow the line or get out? Stand up America! We’ve united in the past to defeat other problems, now it’s time to ignore party politics and unite to solve our own! I’m a single Mom (by divorce) who worked as many as eighty hours a week to raise my kids on my own. If the garbage in D.C. think I’m going to sit idly by and let them rob my kids of the future I slaved to get them they’re dead wrong! My district’s representative and both of my state’s Senators know I’m watching them like a hawk, what about you? I won’t sit down and I certainly won’t shut up until our leaders live up to their obligations. I have one credit card to my name and it gets used for hotel and car rental reservations ONLY. It’s time to force D.C. to cut up and throw away this country’s credit card FOREVER!

        • http://Moreexpensive,moreunknowproblems. Lewis Munn

          You have good points there.

          However, you missed one at least. This is the decline in our education. A planned product of the social engineers of the early 1900′s

          By the time I was in High School, the history omitted most of the causes of wars, and the massive inflation by printing money in Germany that triggered Hitler into power, and we know what happened then, although it is not taught well in public schools!

          We need to teach our country’s history and what the founders said, not gush that Percy Penguin has three fathers, and no mother anywhere around!! How wonderful!!

  • DANNY

    Hmmmm, I wonder who calls the shots at Moody’s

    • mrdave98765

      Let’s see, what problem would that solve? It would solve Obummer’s problem of not being able to increase the debt any time he wants! Moody’s is on something and it’s not apple pie!

    • EddieW

      Dunno, but whoever calls the shots at Moody’s, is in favor of the destruction of this country!! Nice to know there are so many working for our destruction! Obozo, our Liar in Chief is doing a great job of our destruction…80% in two years, wonder if he can finish in another two years??

    • http://Moreexpensive,moreunknowproblems. Lewis Munn

      A moody Moody Mother!!?

  • Matt Matuszewski

    Give us a break, Moody’s weighing in on the debt ceiling, this coming from an outfit that was discredited during the hedge fund debacle. I don’t see how this group can presume to have any credibility left, at all. They shouldn’t be trusted to give the weather report, let alone credit ratings for business, and especially, not for nations.

  • Warrior

    So, as was reported several weeks ago, china sold off 95% of their US debt. That begs the question, who then bought it? Come on Ben, was that you? I say pay everyone else’s interest and stiff the fed.

  • Jim

    I pondered the stupidity of this idea while waiting for the article to appear on screen. The only positive version of the idea would be to eliminate the Debt Ceiling to reflect the concept of “The Fed Will Never Again Go In Debt by Spending Only What It Has”! But, OOPS, that’s not it at all!!!

    What a bunch of idiots! I guess Common Sense is not so common anymore!!!

    • http://flolois204@hotmail.com Lois

      I can not fathom all the idiocy these days: we (my husband and I) always knew that if we did NOT have
      a dollar…..then we DID NOT HAVE A DOLLAR TO SPEND……..
      why is it so difficult to figure that out??
      We need COMMON SENSE……..lois

  • Raggs

    I heard that there is a bill in congress that will give oblama the authority to raise the debt celling anytime he wants to.

    This country is in deep DOO-DOO….

  • SS McDonald

    YEARGHH! Moodys (and S&P) have parroted BAD advice for at least 2 decades. This latest tome is no different. Where is found people so stupid as to report such bad advice? Then there’s the gullible that swallows the advice; they must have an IQ below room temperature.

    • The_REAL_DEAL

      That is because they are in it together….they are at the beck and call of the elitists….dollar looking bad (the truth)? Let’s issue a downgrade on another country….Debt ceiling causing a problem? Let’s recommend removing it…Folks…listen to the REAL DEAL….take a look at the history….

    • Bluebird1995

      The Real American Patriots have been pushed around by Progressives since Franklin D. Roosevelt started Social Security back in the 30′s.
      Obama is blaming Bush 2 and the Republicans for something that has been building for over 70 years. He should stop spreading that crap.
      The Republicans (including the Tea Party) should not allow the tax percentage to be raised. If we need more money from the rich people (over $1 million a year), then they should start closing loop-holes and ask for donations. Anyone who thinks that they are not paying enough in taxes could donate some of their after tax money.

  • Dan

    Here is a PRIME EXAMPLE of the kind of things we could look forward to with NO CONTROL on Government spending . . . They are ALREADY doing this, just imagine a “NO LIMIT” game for them to play !

    http://www.foxnews.com/politics/2011/07/18/nih-backed-study-examined-effects-penis-size-in-gay-community/?icid=maing-grid7|main5|dl1|sec3_lnk2|78613

  • Dan

    LINK fragmented before . . . This works:

    http://tinyurl.com/3dy89my

  • Henry Wright

    I think I will call Master-Card and tell them I’m going to raise my debt limit an see what happens.

    • Average Joe

      Henry Wright,

      I was thinking the same thing, but when I called them…they didn’t like that idea.
      Maybe if I called Moody’s and got them to recommend that everyones credit limit should be unlimited, something would get done.
      I’m thinking, “I sure could use a billion dollar cash advance on my card,cuz daddy needs a new pair of ‘running’ shoes”. Next month I’ll just get two billion so that I can pay the interest (as long as I keep doing this…my credit will be AAA…and everybody is happy …right?)
      The Moody Report for the day…95% chance of stupidity followed by 5% chance of mental retardation!

  • Mike

    I don’t think people really understand our system.

    Gold is finite.

    Paper money is infinite.

    We have had debt going back to the Reagan years and that doesn’t stop the US from being a super power, doesn’t stop it’s citizens from prosperity, and there are no hard ramifications for a nation of our size and strength to carry debt.

    By printing money we create something our of nothing. And the only downside is a little inflation. Repeat: WE CREATE SOMETHING, WHERE THERE WAS NOTING BEFORE.

    So as we raise the ceiling once again, let’s also raise our head and make a toast to best American ever to walk US soil, the man who eliminated the gold standard and created a game of monopoly (that’s right- the game where the bank never runs out of money because it prints more). That man is Richard Nixon.

    • MNIce

      Our debt goes back a lot farther than the Reagan years – way back to Woodrow Wilson, WW I and the institution of the Fed. One thing to note: the deficit during the Reagan years was approximately the same as the interest on the national debt. In other words, if he had not been saddled with the debt, President Reagan would have had balanced budgets for most of his two terms, despite having to fight a spendthrift Congress.

      The current occupant of the White House can make no such claim. He’s running deficits nearly 7 times the interest! Every time he says “responsibility” I have a hard time stifling an outburst of hysterical laughter.

      • Bluebird1995

        You’re right. This current debt situation did all start with the creation and empowerment of the Federal Reserve. The Fed being in control of our money was one of the goals of the international Bankers.
        They have been trying to control all of society for centuries. There is an article about the history of banking that goes back to 43 B.C. Go to http://www.Iamwitness.com and look it up. I don’t have the link any more. It is 53 pages long, so print it off so you have time to read it, unless you are a speed reader.

  • Dan az

    As far as moody goes they are not the congress and if they think removing the debt ceiling is wise then why has those countries gone broke?Is it that they don’t want us to stop bailing them out?Sure lets print some more funny money for them to launder for the IMF its only money.Well sort of! Close maybe,Well it might be if the IMF says they will take it.Is this really the best money can buy?

  • Bob Marshall

    Congress is the reason there has been no restraints. A policy of spend, spend and more spendng.They need more money just have the Treasury Dept. Print it and issue it to the Federal Reserve for distribution. Like a credit card sooner or later you have to pay. Paying minimun payments does little toward paying the interest.Our children and their children are left with a debt that will never be repaid. they will continue to be slaves of the government.Much as we are today.george carlin ha dit right when he said the US has become a huge corporation and we aren’t members.

  • Eric N., CA

    This president has a spending problem and a “lot” of worshiper who love shopping with him. He is an addict in denial. Get rid of him and his worshipers and elect people who have a strong fiscal ethic… end of problem. Cut, Cap, and Balance. Oh, how you liberals out there hate having your checkbooks balanced. You just cannot face the fact that you are habitually overdrawn on other peoples money. Shame on you!

    • Dan az

      Hes not the only one with a spending habit,obumers queen feels that she is due this amount of slaves to serve her as well.Now she has 26 slaves!
      The annual cost to taxpayers for such unprecedented attention is approximately $1,750,000 without taking into account the expense of the lavish benefit packages afforded to every attendant.

      This unprecedented number of attendants is more than any First Lady in U.S. History.

      • http://Moreexpensive,moreunknowproblems. Lewis Munn

        How about poor Obama; he does not have enough male and female slaves to match up with other Muslim countries! He doubtless hates this.

        Should we not pass a law allowing him 7 male slaves and 21 female slaves to take care of his every need? And for Her Majesty, three of each gender. Plus one for each child. Ought to help all of their discomforts, especially when visiting overseas.

        I think Rev. Wright can make it OK with His god if there are any questions. For a generous contribution, added on to the national taxes!
        Oh, everybody pays to keep the Obamas happy!

        • Dan az

          Lewis :)

  • Liam

    Weren’t Moody and S&P responsible for giving the bundled derivities tripple A ratings before the big mortgage meltdown? I think they are in Obama’s pocket.

  • anthony

    It would be good to go ahead an finish the dollar off. This will for sure do it! Once the dollar is worthless……I’ll take a few silver dollars and buy $100,000 in fiat dollars…then give it back to the banks to pay them back for what dollars they created for me!

    • Dan az

      anthony
      If that could work that would be a great idea.With the one world currency going to take over I really don’t see them excepting funny money anymore.But I would like to see what happens to the money that anyone has when they make the change.Sense our money will be useless around the world we will not have a choice whether we except it or not.While the feds keep our gold they will use it to convert their money over and as long as we don’t have anything backing ours seems to me that we are just sh-t out of luck.Welcome to the NWO.

      • anthony

        Dan they created funny money for my self funded loan…..Now I’m going to give the funny money back to them. What goes around comes around!

      • anthony

        One more note: The new world currency will be funny money too!!! To benefit the very once’s that’s destroying the dollar.

  • meteorlady

    I cannot fathom where a reduction will be of any use in this case. They will still have a blank check to spend spend spend…..

  • MNIce

    How come so many of the people flame the “Republicans” or “Congress”? You are using an over-sized brush and end up tarring some who do not deserve it. Most of the Republicans in the house are actually on our side in this issue. If they weren’t, do you think there would even have been a debate over raising the debt limit?

    The problem is the senior Republicans with weak knees. Mitch McConnell with his unconstitutional “backup plan” reminds of the hapless Bob Michel – the former House Minority Leader who was so used to losing that he left Congress when the Republicans became the majority party in 1994. (If he was really, really good, he might be allowed to ride along in the back of the Speaker’s golf cart.) McConnell should have kept that plan a secret until it became obvious the Democrats would not ever listen to reason, or better yet, to his grave. Now, like al-Quaida and Iran waiting for the end of the scheduled troop withdrawal, Obama has hope he can wait out the restraining forces in the House, hold out for McConnell’s plan, then continue to run wild with the nation’s credit.

  • MNIce

    This suggestion that the US simply scrap the debt limit has severely damaged the credibility of Moody’s, at least as far as I’m concerned. The debt limit is the best tool the House has for calling the Senate and Executive Branch on their irresponsible spending habits. It makes no sense to raise the credit limit on anyone headed for bankruptcy, much less eliminate it.

    What the House needs to do in connection with the Cut, Cap and Balance bills is to send the Senate a batch of bills canceling appropriations to repay the money embezzled by Tim Geithner from the Federal employees’ Pension Fund (part of his scheme to evade the debt limit for a while), and serve notice that they will not be be renewing appropriations for those programs that will be affected. Let the Democrats in the Senate and White House throw all the childish tantrums they want – it will only show who the real adults are.

    • Dan az

      MNIce
      Well put they need to be treated like children.We need to put a stop to their shananigans and give them the paddle.

      • http://Moreexpensive,moreunknowproblems. Lewis Munn

        Maybe we can lock them overnight with a good number of new Gays, and let them enjoy real freedom. Let them out in the morning, sleeping soundly, prop them in their chairs, and have business as usual in Congress!

        • Dan az

          Lewis
          your killing me! :)

  • Mutantone

    One has to wonder about Moody’s real goals, I think they are trying to shore things up for their investment branch and could care less about the Nation

  • Verus Langham

    I think Moodys has sipped from the flask of insanity on this one. It would be far more in line for Moodys to profer to conjecture this one in a third-world country already in existence, not the one that Barrack is trying to make this one into – they probably have the entire Islamic world’s pocketbook and treasury at their disposal and we do not. Our over-spent treasury (if that isn’t an oxymoron) has been given by our Constitution’s Founders a debt limit mandate for the simple reason they realized to neglect this feature would immediately put upon the backs of all our citizens a massive debt in-absentium (my understanding, whether we want one or not and without due representation by the powers that are in office at any point in history… knowing full well that a system of checking the limits of government spending was the only way to keep the new nation from becoming prey and fodder for those in foreign banks and our very enemies who would lend lend lend us into oblivion.) Does Moodys think the Founders were not a frugal bunch for no reason?

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