US Credit Rating Could Come Under Pressure

[$cirisme]

Moody's Investors Service said on Thursday the United States' "triple-A" government bond rating could come under pressure in the very long-term if the Medicare and Social Security programs are not reformed.

"These two programs are the largest threats to the long-term financial health of the United States and to the government's Aaa rating," Moody's analyst Steven Hess said in the agency's annual report on the United States.

Moody's: U.S. rating could be pressured in long term (http://www.reuters.com/article/bondsNews/idUSN1017237120080110?sp=true).

I wonder what practical effect a rating change would have on our governmental spending.

[Sheepdog]

the politicians would have to stop spending like drunken sailors.

...i know. a boy can dream though :sigh:

[nickcopernicus]

Nick:
IMO, nothing short of bankruptcy would pursuade the Politicians to give a crap about the National Debt, or the economy for that matter.

Cheers,

Nick

[Ryokan]

Moody's Investors Service said on Thursday the United States' "triple-A" government bond rating could come under pressure in the very long-term if the Medicare and Social Security programs are not reformed.

"These two programs are the largest threats to the long-term financial health of the United States and to the government's Aaa rating," Moody's analyst Steven Hess said in the agency's annual report on the United States.

Moody's: U.S. rating could be pressured in long term (http://www.reuters.com/article/bondsNews/idUSN1017237120080110?sp=true).

I wonder what practical effect a rating change would have on our governmental spending.Not much. Its not spending but taxation or a reduction in medical care cost that can solve the problem. SS is not a problem, really. Minor changes will fix it. Medicare cannot be fixed by spending changes, only cuts in medicare, tax increases, or
medical cost reductions can end the issue.
Oh, Hi, by the way. Just stopping by. I want to get into the swing of forum posting again, but I've been very busy.

[$cirisme]

Good to see you Ryokan. Please do stop in and post more often when you're able.

[Teallaura]

:hi: Hi Ry!!!

[Augustine2004]

But, what's bankruptcy? At least legally speaking, only courts could declare an entity to be bankrupt. What court would declare the US Federal Government bankrupt? It may default on its bonds, but that's not exactly bankruptcy according to the law.

[Teallaura]

They're using common parlance - it means broke. Technically, you're correct a nation-state cannot be legally bankrupt. To the best of my (limited here) knowledge no such provision exists in international law (I'm probably on solid ground here or 90% of Africa would be in bankruptcy).

[Augustine2004]

Insolvent, yes. The government sure does look insolvent. I just don't see how it can possibly meet its 'obligations' without cutting back, i.e., defaulting.

[Pilgrim]

I'm with a lot of you. I don't think the government will do anything about spending. The US will just through its weight around to manipulate lending no matter what its rating.

[Ryokan]

:hi: Hi Ry!!!

Hi teal!

[Jimmy Higgins]

Not much. Its not spending but taxation or a reduction in medical care cost that can solve the problem.Woah. Our annual deficit is really close to the huge increase in military spending under the Bush Adminsitration. If we cut military spending to levels at 2001, the deficit would disappear. 2001 levels would still see $300 billionish going to the Department of Defense, which isn't too shabby.

[Ryokan]

Woah. Our annual deficit is really close to the huge increase in military spending under the Bush Adminsitration. If we cut military spending to levels at 2001, the deficit would disappear. 2001 levels would still see $300 billionish going to the Department of Defense, which isn't too shabby.

I think it will be hard to argue in an environment post 9/11 and one where the occupation of 2 relatively small nations can stretch our military's resources that defense cuts our in the cards. It is my understanding both Republican and Democratic candidates would like to increase spending. Its also worth pointing out we could make up the difference with the horrible managed prescription drug program.
But what I was talking about is the actual wars budgets. Even if we kept the US defense budget at current levels though it would be dwarfed by the medicare deficit.

[nickcopernicus]

Woah. Our annual deficit is really close to the huge increase in military spending under the Bush Adminsitration. If we cut military spending to levels at 2001, the deficit would disappear. 2001 levels would still see $300 billionish going to the Department of Defense, which isn't too shabby.
Nick:
I somehow doubt it (deficit). It probably has more to do with "temporary" tax cuts AND increased spending.

I think that instead of cutting spending on the military, we should cut government programs that have proven themselves worthless. like FEMA. The National Guard probably helped the Hurricane Katrina victims more then FEMA....

Cheers,

Nick

[Jimmy Higgins]

Nick:
I somehow doubt it (deficit). It probably has more to do with "temporary" tax cuts AND increased spending. Since 2001, 75% of our increase in discretionary spending (excluding war costs) has been Department of Defense. It's gone up nearly 100% in that time, about $300 billion worth.

I think that instead of cutting spending on the military, we should cut government programs that have proven themselves worthless. like FEMA. The National Guard probably helped the Hurricane Katrina victims more then FEMA.... Are you insane? Just because Bush put some person with 0% experience of Emergency Management doesn't mean we should scrap the program. That was Bush's bungling. FEMA had done quite well up to that point.

[Teallaura]

While I agree the scorched earth school of budget cuts is not a great idea, FEMA's problems were mostly internal and well predated Bush. They simply weren't as noticeable in the much smaller emergencies FEMA had handled previously. Most of its large successes were much earlier in its history - and even Andrew didn't have the scope of Katrina.

It got old and top heavy - it needs a massive overhaul (which is happening, albeit in fits and starts) but no one president is to blame.

[Jimmy Higgins]

While I agree the scorched earth school of budget cuts is not a great idea, FEMA's problems were mostly internal and well predated Bush.Actually, they may have pre-dated Katrina, however it was post 9/11 as well, the big issues that inhibited FEMA's response to Katrina was #1, the head of FEMA had no experience with emergency management and was in no way capable of dealing with the flooding of a major city and FEMA's incorporation into Homeland Security created a whole new set of red tape barriers that kept anyone from going in to help New Orleans immediately after the hurricane hit.

Brown didn't react to Katrina for days (a leviathan category 5 was steaming at sea and it took him days to respond). And red tape kept people from getting authority to help with the recovery effort.

[Augustine2004]

Are you insane? Just because Bush put some person with 0% experience of Emergency Management doesn't mean we should scrap the program. That was Bush's bungling. FEMA had done quite well up to that point.Please try to refute the arguments presented in this thread: http://www.theologyweb.com/campus/showthread.php?t=107328

[Teallaura]

I didn't say the current admin had no responsibility but FEMA wasn't that healthy an agency to begin with. Brown being an idiot doesn't negate that.

[Teallaura]

Thats not kosher, Augustine - Jimmy can't post there. Also, we don't allow 'argument by weblink' and that includes those links that are intra- Tweb. If you want to present the argument then ask Jimmy if he will debate it with you elsewhere since Cir doesn't want this thread derailed.