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Can you hear that? It’s the sound of not one, not two, but all three major credit rating agencies now saying the same thing: the US fiscal situation is unsustainable. Today Moody’s looked at what Congress is proposing and determined that it would make things even worse, to the point of questioning our ability to get our borrowing under control.
It’s time for policymakers to hit pause, go back to the drawing board, and put forward a plan that actually takes steps toward putting our nation on a sustainable fiscal trajectory. At the very least, we should not be considering adding more than $3 trillion to the debt – or $5.2 trillion if temporary provisions are made permanent - after we were just told our credit worthiness is inferior to what it was.
Warning signs are everywhere. The Moody’s downgrade comes alongside increasing volatility in the bond markets, with the 10-year Treasury yield increasing by roughly 30 basis points since the beginning of the month. Our federal interest payments are skyrocketing, already surpassing what we spend annually on defense or Medicare.
Congress, take note: stop what you’re doing, step away from the ledge, and start working on a way out of this mess.
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