Moody's suggests U.S. eliminates debt ceiling

[dkf]

(Reuters) - Ratings agency Moody's on Monday suggested the United States should eliminate its statutory limit on government debt to reduce uncertainty among bond holders.

The United States is one of the few countries where Congress sets a ceiling on government debt, which creates "periodic uncertainty" over the government's ability to meet its obligations, Moody's said in a report.

"We would reduce our assessment of event risk if the government changed its framework for managing government debt to lessen or eliminate that uncertainty," Moody's analyst Steven Hess wrote in the report.

The agency last week warned it would cut the United States' AAA credit rating if the government misses debt payments, increasing pressure on Republicans and the White House to come up with a budget agreement.



http://www.reuters.com/article/2011/07/18/us-usa-debt-moodys-idUSTRE76H0WH20110718?feedType=RSS&feedName=topNews&rpc=71

[Turbineguy]

1. That's actually not a bad idea.

Of course the teabaggers will problems with it.

[liberalla]

2. Could this be a way for those R's to save face and thereby

not be held hostage by the Teabags? At least on this one issue? They were looking for a way out last week. I could see removal of the debt ceiling being welcomed, and I could also see it being flat out rejected.

Personally, I like the idea. What a waste of time and energy these past weeks/months have been. We could have been working on (or fighting over, depending how you look at it) the JOBS and infrastructure programs.

[hobbit709]

3. And the clowns that overrated the junk derivatives have credibility in this?

[quaker bill]

4. It makes sense

Congress taxes and appropriates. It already has control of the debt. If they want less debt, they just tax more and spend less. If they want more debt, they tax less and spend more, like they did for the entire Bush administration. The decision about the national debt is made when they pass the budget. Why make the same decision twice? They passed a budget with a large deficit and a tax deal with a larger deficit to keep the Bush giveaways in place. The deficit is just a product of these previous decisions, it should be allowed to go where ever they have sent it.

[liberalla]

7. "Why make the same decision twice?" Exactly.

You've simplified the situation very well.


They'll still have all the same battles over the budget and taxes, etc. but
they won't put our whole economy and credit rating at risk every time.

[RickFromMN]

5. I don't know what to think about this idea.

I don't think this idea will prevent our bond rating from going down.

Investors will still want to know if, and when, we will repay our debt.

Even if we don't have a debt ceiling, we will still have a debt number.
Investors will go by that debt number, regardless.

I tried to google, to find out which countries have a debt ceiling.
I failed to find any countries, outside of the United States.

Does Greece have a debt ceiling? If not, did not having a debt ceiling help them?

To me, the debt ceiling is a tool. Hopefully, it provides an early warning.
Hopefully, it warns us when we need to do something about our debt problems.
Hopefully, it curbs our tendency to, pardon the expression, live off our credit card.

Hopefully, it forces us to face the reality, we have to pay for the services we demand.

I don't think the above is idealogical. The Republicans will argue, lower spending.
I argue, we need the government services; we need to increase taxes.

I know putting words in the Republicans' mouths isn't fair. I believe....
It's like the Republicans argue those who benefit from government services
should pay for the government services even though they can't afford it.

I offer two arguments. Those who benefit from our system should pay for our system.
The rich, by definition, benefit the most from our system.
I don't think the rich actually pay for the services they use, at least not their share.

My second argument, those who can most afford to pay should be expected to pay more.
I'm sure the Republicans object to this second argument. They call it redistribution.

The Republicans are opposed to redistribution from the rich to the poor,
but happy to have redistribution from rich states to poor states.
Look at which states get more from the Federal government than their citizens pay in.

The Republicans are opposed to government programs unless those programs benefit them.

Look at FEMA. FEMA is a government program.
North Dakota was upset FEMA wasn't coming to aid their flood problems fast enough.
North Dakota was worried FEMA wasn't coming to their aid at all for a while.
At the same time, North Dakota is swimming in oil.
North Dakota is looking to cut or eliminate various taxes.
Government, according to North Dakotans, is "bad", but FEMA, if it moves fast enough, is good.

Let's means test FEMA. Let's have a tough austerity program attached to FEMA's help.
If a state needs FEMA's help, the state must automatically increase taxes on its rich.
The state must go through a spend down before getting any FEMA aid.

To our Republican friends, let's require they use the private insurance system.
Let's require they get private insurance to cover their natural disaster problems.
They say the private system does health insurance better.
The private insurance system can do natural disasters better too then.

I bet the Republicans, and the Republican states, wouldn't like that.

I wish we had a national health system.
Single payer would only be the first step.
Medicare for all would only be the first step.

[liberalla]

6. K & R

:kick: