Moody’s to Obama: Umm.. No, not raising the debt ceiling would not destroy the world

**Posted by Phineas

Obama loan officer at work — Obama debt adviser

Daring to contradict The One’s attempts to beat the House into submission by causing a panic? Moody’s is so going to get audited:

In a memo being circulated on Capitol Hill Wednesday, Moody’s Investors Service offers “answers to frequently asked questions” about the government shutdown, now in its second week, and the federal debt limit. President Obama has said that, unless Congress acts to raise the $16.7 trillion limit by next Thursday, the nation will be at risk of default.

Not so, Moody’s says in the memo dated Oct. 7.

” We believe the government would continue to pay interest and principal on its debt even in the event that the debt limit is not raised, leaving its creditworthiness intact,” the memo says. “The debt limit restricts government expenditures to the amount of its incoming revenues; it does not prohibit the government from servicing its debt. There is no direct connection between the debt limit (actually the exhaustion of the Treasury’s extraordinary measures to raise funds) and a default.

(…)

The Moody’s memo goes on to argue that the situation is actually much less serious than in 2011, when the nation last faced a pitched battle over the debt limit.

The bolded portion is key: the United States Government takes in enough revenue to meet its financial obligations, and the Treasury Secretary has the authority to prioritize payments on the debt. It just stops the government from borrowing to cover its spending. As Dan Mitchell explains:

The White House wants people to believe genuine default is likely even though tax receipts this fiscal year are expected to be more than $3 trillion and interest on the debt is projected to be only $237 billion. In other words, the Treasury will collect more than 12 times as much revenue as needed to pay interest on the debt. Even someone like me, with my well-known views on the incompetence of the federal government, thinks that the Treasury Department will have no problem figuring out how to avoid default.

Remember that when the White House ramps up the scare tactics in the coming days. If the United States defaults, it will solely be by President Obama’s choice.

via Bryan Preston

(Crossposted at Public Secrets)

7 Responses to "Moody’s to Obama: Umm.. No, not raising the debt ceiling would not destroy the world"

Joy says:

October 9, 2013 at 9:43 pm

Obama is trying to drive down the markets and convince Americans that everything is the Republican’s fault. We cannot let him get away with this. We have to keep posting on the internet the things we see the Obama Administration doing to make the Shutdown be as painful as possible for the American people. The media will not cover anything that makes Obama looks bad so it is incumbent on us to be the journalists that our media refuses to be. And, we must keep spreading the information about the tax revenues provide 12 times as much revenue as needed to pay the interest on our debt so if there is a default, it will be entirely Obama’s doing.
Drew the Infidel says:

October 10, 2013 at 4:45 am

Same song, different verse of the last election campaign where all that is wrong with the nation is the fault of “millionaires and billionaires, Granny over the cliff, and blame Bush”. Trying to dramatize this theme with the symbolic shutdown of the WWII memorial is one thing but refusing to pay for the customary accommodation of the families of returning war dead and immediate payment of their death benefit is taking things way too far in order to dramatize a point.
ALman says:

October 10, 2013 at 6:27 am

Warren Buffett, it has been reported, has made $10 billion during the financial crisis. Didn’t Mr. Stoompy Foot give him some sort of award? Perhaps, the two need to have a consult. One of them seems to know what he’s doing; the other, not so much.
Carlos says:

October 10, 2013 at 9:00 am

Well, I’m glad Moody’s agrees with me. As I noted in an earlier comment, the debt ceiling is simply a number, don’t mean nothin’, and the sky’s not gonna fall and crush us all if we go beyond that date without increasing the ridiculous amount Congress allows itself to overspend.

Unless, of course, Mr. Stompy Foot takes it (illegally) upon himself to refuse to service our contractual debts, in which case there could be a problem on down the road a bit.

In the meantime, sit back and enjoy the fact that not only is the guvmint forcing itself to stay within its means, if we go past the debt limit expiration, we won’t be paying foreign aid to all those countries that would nuke us in a New York minute if they thought they had half a chance of surviving.

I would, however, like to see the guvmint welfarers taking a paid vacation now treated like most other workers in the real world, and not get paid because their overseers are too incompetent and petulant to do the job they were elected to do. If they want paid for this fiasco, let them use accrued vacation time. If that were to happen, maybe they’d put some pressure on the spoiled children in the capitol to get some things done that haven’t been done since the current royalty took over, like submit a real, workable budget.
Drew the Infidel says:

October 10, 2013 at 1:49 pm

@Carlos–He submitted one budget the entire time he has been in office which was voted down in the Senate 97-0, which is the equivalent of nothing.
John W says:

October 10, 2013 at 7:04 pm

Ever since the government shutdown/slimdown began last week, we have been seeing time and again how President Petulant has deliberately chosen to invoke unnecessarily harsh measures, solely for the purpose of making the Republicans look like the bad guys. This intentional infliction of pain upon the American people is yet another example of Obama disobeying the oath he took on Inauguration Day to “faithfully execute the office of the President of the United States”. I shudder to think of what diabolical plans Obama will try to carry out if the debt ceiling is not raised high enough for his liking.
Carlos says:

October 13, 2013 at 4:20 pm

Like I said, Drew, “…like submit a real, workable budget.”

And with Duh-1’s extensive, deep and knowledgeable background in finances, I’m real sure the submitted budget you mentioned was as good as it gets…

Comments are closed.