The following video from Standard & Poor’s explains their position for downgrading the United States’ credit rating within the next 90 days.
httpv://www.youtube.com/watch?v=BhOUw0jO0gg
Keep in mind that they expect the debt ceiling to be raised and this is not a factor in their downgrade analysis. They want to see a stabilization of debt to GDP ratio. If the debt ceiling is not raised, they will downgrade the credit rating sooner. They also expect a default to be “a low probability event”.
Their recommendation for a “fiscal adjustment” necessary to achieve the stabilization of debt to GDP ratio to maintain our triple A rating is $4 trillion in cuts that are verifiable and over a ten year period. Given a current debt of $130 trillion, I would have expected larger cuts. This $4 trillion cut must be the goal of any plan that Congress approves.
The 2011 budget for the departments of Housing, Energy and Education is $122.55 billion. If we assume an inflation rate of 5% for each of their budgets, eliminating these three departments which have failed in their stated goals, would save $1.54 trillion over ten years. It really is that simple to start cutting the head off of the beast in Washington.
David DeGerolamo
Related Article:
Budget 2011: Education Spending Skyrockets
