Deal or No Deal, Our AAA Rating Is Toast
By Howard Gold
It’s been a hot summer, and it’s been even hotter in Washington, D.C., where Democrats and Republicans have been burning down the House with a pitched battle over the debt ceiling, the cap that Congress puts on the national debt.
Usually it’s a mundane bit of legislative business barely worthy of C-Span. Congress hikes spending, and then authorizes an increase in the debt ceiling to pay for it. It’s happened 78 times since 1960. But this year it will likely cause the US’s prized AAA credit rating to go up in smoke.
Newly elected Tea Party Republican Congressmen have held fast to their campaign promises to cut spending. They have demanded spending cuts at least equal to the roughly $2 trillion that the debt ceiling will have to be increased to from its current $14.3 trillion to cover rising expenditures.
If that doesn’t happen by August 2, President Obama and many others have warned the government won’t be able to meet all its obligations, including interest payments on the debt, military pay, Social Security checks, what have you. If we can’t, it could mean a default by the US government, just like Argentina and Mexico did in days of yore.