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by
Bryan Preston

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October 9, 2013 - 3:16 pm

In a debt ceiling memo making the rounds in Washington today, Moody’s credit rating agency destroys President Obama’s rationale for raising the debt ceiling. The nation reaches that ceiling on October 17, and President Obama has repeatedly said that if Republicans do not agree to raise the ceiling, the nation will default, damaging our credit rating and sending the economy back into recession. Obama says “economic chaos” would result from a failure to raise the debt ceiling, which he wants done without any spending cuts attached.

Moody’s disagrees.

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.

Moody’s memo puts the default ball squarely in President Obama’s court. He has the power to prioritize spending, and could choose not to make interest payments on the national debt — but that would be his choice, not Congress’.

As a senator, Obama strongly opposed raising the debt ceiling in 2006.

Bryan Preston has been a leading conservative blogger and opinionator since founding his first blog in 2001. Bryan is a military veteran, worked for NASA, was a founding blogger and producer at Hot Air, was producer of the Laura Ingraham Show and, most recently before joining PJM, was Communications Director of the Republican Party of Texas.

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All Comments   (5)
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What difference does Moody's opinion make in any case?

Obama will simply flout the law, as he does every day on every other issue. He and his hack Lew control the Treasury Department, who would be responsible for making the debt payments. If he refuses to make them, how exactly could he be forced to before default would occur?

The ensuing collapse of the financial system is precisely the type of "crisis too good not to be taken advantage of" that an Alinskyite community organizer has wet dreams about.
42 weeks ago
42 weeks ago Link To Comment
He's losing his grip - on the narrative and reality. Sounds like the adults in finance are getting tired of the temper tantrums...people with real money, real jobs, and real responsibility are just tired of this s#@!
42 weeks ago
42 weeks ago Link To Comment
DAAAAAMMIT, MOODY!!! That was my ace in the hole to pair with scaring Granny that her social security check wouldn't come......what scam can we come up with now for the media to spread for us? To be the "smartest man EVAH to be president" he sure does spew a lot of ignorant foul sh!t from his oral fecal matter projection orifice...

Remember BENGHAZI!
42 weeks ago
42 weeks ago Link To Comment
The only possible way to default by declining to incur more debt is if you are running a Ponzi scheme. http://billlawrencedittos.com/ponzi-scheme-national-debt/

42 weeks ago
42 weeks ago Link To Comment
That's perfect, I love it!
42 weeks ago
42 weeks ago Link To Comment
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