Unfortunately, this country has to deal with the consequences of a dysfunctional government. The deficit is set to reach $2 trillion this year. A good chunk of the increase is interest rate increases when the Federal Reserve raising the Feds funds Rate (overnight bank ending rate.
However, the last time these imbeciles shut down the gover…
Unfortunately, this country has to deal with the consequences of a dysfunctional government. The deficit is set to reach $2 trillion this year. A good chunk of the increase is interest rate increases when the Federal Reserve raising the Feds funds Rate (overnight bank ending rate.
However, the last time these imbeciles shut down the government, Fitch, a credit rating agency, downgraded the US debt rating. If we shut down again, every rating agency including Moody’s and Standard and Poor’s, will do the same; increasing the cost of borrowing, which will have a tremendous negative impact on our economy.
Bottom line: servicing the debt (just interest), will be larger than our military budget! Let that sink in!
I may be wrong but i think the downgrading was related to raising the debt limit not shutting down the government. They are not the same thing. Both are bad policies.
It’s a combination. Too much debt, our inability to address Medicare and Social Security, but more immediately, a dysfunctional government that can’t even pass a budget without allowing politics to rear its ugly head.
“Ratings Downgrade: The rating downgrade of the United States reflects the expected fiscal deterioration over the next three years, a high and growing general government debt burden, and the erosion of governance relative to 'AA' and 'AAA' rated peers over the last two decades that has manifested in repeated debt limit standoffs and last-minute resolutions.
Erosion of Governance: In Fitch's view, there has been a steady deterioration in standards of governance over the last 20 years, including on fiscal and debt matters, notwithstanding the June bipartisan agreement to suspend the debt limit until January 2025. The repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management. In addition, the government lacks a medium-term fiscal framework, unlike most peers, and has a complex budgeting process. These factors, along with several economic shocks as well as tax cuts and new spending initiatives, have contributed to successive debt increases over the last decade. Additionally, there has been only limited progress in tackling medium-term challenges related to rising social security and Medicare costs due to an aging population.
Rising General Government Deficits: We expect the general government (GG) deficit to rise to 6.3% of GDP in 2023, from 3.7% in 2022, reflecting cyclically weaker federal revenues, new spending initiatives and a higher interest burden. Additionally, state and local governments are expected to run an overall deficit of 0.6% of GDP this year after running a small surplus of 0.2% of GDP in 2022. Cuts to non-defense discretionary spending (15% of total federal spending) as agreed in the Fiscal Responsibility Act offer only a modest improvement to the medium-term fiscal outlook, with cumulative savings of USD1.5 trillion (3.9% of GDP) by 2033 according to the Congressional Budget Office. The near-term impact of the Act is estimated at USD70 billion (0.3% of GDP) in 2024 and USD112 billion (0.4% of GDP) in 2025. Fitch does not expect any further substantive fiscal consolidation measures ahead of the November 2024 elections.”
My friend yesterday started trying to get me to watch “2000 Mules” and Durham’s take on his report. Today I’ll ask her if she’s ever heard of Moody’s or Standard and Poor’s.
I can’t. We grew up next door to each other since we were in Pampers. She tried to talk me down (and even gave me a pot brownie!) watching election night at her house, with ne’er a peep of praise for the other side. Letting go would feel like letting go of your friend’s hand and watching them slide down under the quicksand. I can’t give up hope.
I was kidding, but I have a few family and friends that are the same. And you can’t pick your family, although if you live far enough away, you can avoid them most of the time...:)
Ok, it's sinking in. What's the problem? In specific, concrete terms, not that it's icky.
And rating agencies are irrelevant to what the government pays in interest; what's relevant is the gop seeding doubt that the full faith and credit of the US has any meaning.
Fair enough, but the rating agencies, while they don’t necessarily have an effect on our interest rates, the way they do with corporations, they do serve as a harbinger of things to come. The markets will eventually act if we don’t get our shit together.
The US is the reserve currency of the world. All commodities trade in dollars because of the dollars stability. With a dysfunctional government, unable to pass a yearly budget, the world pays attention, and will eventually require a different reserve currency, or a currency based on many countries, instead of ours.
Should that occur, are economic standing in the world diminishes.
Which is to say, the issue right now is not the scale of the deficit per se but rather the total irresponsibility of the authoritarian party in the house.
And when the U.S. credit rating takes a hit, we all lose money in our retirement accounts. Which is only painful if one HAS a retirement account, and also assumes one notices the connection.
Agreed. When I worked on Wall Street a few college grads joined my team at UBS. One graduated top in his class at Vanderbilt and was an economics major. He didn’t know the deficit adds to the debt and the two were separate.
The deficit isn't helped either by one political party taking increased revenues off the table. Let's use the household analogy. If my family budget is short every month, I look at taking on a side job. I don't decide to either run up my credit cards, or stop paying the electric bill.
The Republicans are eager to stop paying the rent, just to get back at the landlord. McCarthy negotiated his way out of that one, but now they don't want to stick to the agreement. If it was up to them, the US would be out on the street, much like too many of its citizens.
Unfortunately, this country has to deal with the consequences of a dysfunctional government. The deficit is set to reach $2 trillion this year. A good chunk of the increase is interest rate increases when the Federal Reserve raising the Feds funds Rate (overnight bank ending rate.
However, the last time these imbeciles shut down the government, Fitch, a credit rating agency, downgraded the US debt rating. If we shut down again, every rating agency including Moody’s and Standard and Poor’s, will do the same; increasing the cost of borrowing, which will have a tremendous negative impact on our economy.
Bottom line: servicing the debt (just interest), will be larger than our military budget! Let that sink in!
I may be wrong but i think the downgrading was related to raising the debt limit not shutting down the government. They are not the same thing. Both are bad policies.
It’s a combination. Too much debt, our inability to address Medicare and Social Security, but more immediately, a dysfunctional government that can’t even pass a budget without allowing politics to rear its ugly head.
“Ratings Downgrade: The rating downgrade of the United States reflects the expected fiscal deterioration over the next three years, a high and growing general government debt burden, and the erosion of governance relative to 'AA' and 'AAA' rated peers over the last two decades that has manifested in repeated debt limit standoffs and last-minute resolutions.
Erosion of Governance: In Fitch's view, there has been a steady deterioration in standards of governance over the last 20 years, including on fiscal and debt matters, notwithstanding the June bipartisan agreement to suspend the debt limit until January 2025. The repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management. In addition, the government lacks a medium-term fiscal framework, unlike most peers, and has a complex budgeting process. These factors, along with several economic shocks as well as tax cuts and new spending initiatives, have contributed to successive debt increases over the last decade. Additionally, there has been only limited progress in tackling medium-term challenges related to rising social security and Medicare costs due to an aging population.
Rising General Government Deficits: We expect the general government (GG) deficit to rise to 6.3% of GDP in 2023, from 3.7% in 2022, reflecting cyclically weaker federal revenues, new spending initiatives and a higher interest burden. Additionally, state and local governments are expected to run an overall deficit of 0.6% of GDP this year after running a small surplus of 0.2% of GDP in 2022. Cuts to non-defense discretionary spending (15% of total federal spending) as agreed in the Fiscal Responsibility Act offer only a modest improvement to the medium-term fiscal outlook, with cumulative savings of USD1.5 trillion (3.9% of GDP) by 2033 according to the Congressional Budget Office. The near-term impact of the Act is estimated at USD70 billion (0.3% of GDP) in 2024 and USD112 billion (0.4% of GDP) in 2025. Fitch does not expect any further substantive fiscal consolidation measures ahead of the November 2024 elections.”
My friend yesterday started trying to get me to watch “2000 Mules” and Durham’s take on his report. Today I’ll ask her if she’s ever heard of Moody’s or Standard and Poor’s.
If she’s trying to indoctrinate you to that debunked horse s***, maybe it’s time for new friends....:)
I can’t. We grew up next door to each other since we were in Pampers. She tried to talk me down (and even gave me a pot brownie!) watching election night at her house, with ne’er a peep of praise for the other side. Letting go would feel like letting go of your friend’s hand and watching them slide down under the quicksand. I can’t give up hope.
I was kidding, but I have a few family and friends that are the same. And you can’t pick your family, although if you live far enough away, you can avoid them most of the time...:)
Ok, it's sinking in. What's the problem? In specific, concrete terms, not that it's icky.
And rating agencies are irrelevant to what the government pays in interest; what's relevant is the gop seeding doubt that the full faith and credit of the US has any meaning.
Fair enough, but the rating agencies, while they don’t necessarily have an effect on our interest rates, the way they do with corporations, they do serve as a harbinger of things to come. The markets will eventually act if we don’t get our shit together.
The US is the reserve currency of the world. All commodities trade in dollars because of the dollars stability. With a dysfunctional government, unable to pass a yearly budget, the world pays attention, and will eventually require a different reserve currency, or a currency based on many countries, instead of ours.
Should that occur, are economic standing in the world diminishes.
Which is to say, the issue right now is not the scale of the deficit per se but rather the total irresponsibility of the authoritarian party in the house.
Agreed...:)
That's it 110%. The idea that our national debt isn't sacred hurts our national security more than any perceived lack of naval vessels.
And when the U.S. credit rating takes a hit, we all lose money in our retirement accounts. Which is only painful if one HAS a retirement account, and also assumes one notices the connection.
Luckily that can all be blamed on Biden, so it's all good! :) [more gallows humor than sarcasm. :)]
Speak for yourself. "Thanks Obama" is a common line I use around the house. Last time was when my dishwasher rack broke.
I thank Biden for broken things now. Time to move on.
Just take those old records off the shelf...
Agreed. The damage these people are doing In incalculable...:)
One sad thing I noticed years ago is that most voters don't know the difference between the deficit and the debt.
Agreed. When I worked on Wall Street a few college grads joined my team at UBS. One graduated top in his class at Vanderbilt and was an economics major. He didn’t know the deficit adds to the debt and the two were separate.
And he was an economics major...:)
That's scarey!
I know....:)
The deficit isn't helped either by one political party taking increased revenues off the table. Let's use the household analogy. If my family budget is short every month, I look at taking on a side job. I don't decide to either run up my credit cards, or stop paying the electric bill.
The Republicans are eager to stop paying the rent, just to get back at the landlord. McCarthy negotiated his way out of that one, but now they don't want to stick to the agreement. If it was up to them, the US would be out on the street, much like too many of its citizens.