Moody's worried U.S. tax cuts could become permanent

[Joanne98]

Source: Reuters

NEW YORK, Dec 7 (Reuters) - Moody's Investors Service is worried the extension of U.S. tax cuts agreed by President Barack Obama and Republican leaders could become permanent, hurting U.S. finances and its credit ratings in the long run.

Steven Hess, Moody's lead sovereign analyst for the United States, said on Tuesday doesn't foresee any change in the U.S. AAA ratings in the next 18 months to two years. He is, however, concerned about "what's going to happen in two years," when the extensions are set to expire again.

"The timing two years from now will be very complicated from a political point of view, with presidential elections in November 2012," Hess told Reuters in an interview.

"So we don't know if this is going to be extended again, or partially extended again," he said, noting that the tax cuts, while expected to provide an immediate "growth uptick", will hurt the country's fiscal position in the long run.

"We have long term concerns about the (U.S. credit) outlook and they are not yet being addressed. We're waiting to see if they're going to be addressed in the next couple of years," Hess said.



Read more: http://www.reuters.com/article/idUSN0728242520101207

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There's a game going on here IMHO!

Catfood commission comes up with 4 trillion in CUTS.. Then we extend the Bush tax cuts ADDING to the debt.

There's going to be a bait and switch.

As soon as the tax cuts are signed ALL the fake conservatives will come out of the closet saying..

THE DEBT THE DEBT THE DEBT. WE GOING TO BE GREECE!

The bond vigilaties will start drivng the spreads on US treasury bonds and THEN

We will pay for the tax cuts with SOCIAL SECURITY CUTS!

Transfer of wealth from the poor to the rich. TA DA! reverse Robin Hood. Bait and switch!

[SpiralHawk]

1. "Republicon economic 'ideas' totally suck." - Mooody's

"Hello, America! Wake up and smell the RepubliCon economic FAIL. Did you sleep through the last 10 years? Can you not see that Republicon so-called 'conservativism' is just a bullshit cover for EconoFAIL? We ain't buying this Tax Cuts for FatCats bullshit and neither should you."

- Mooody's

[avaistheone1]

2. Whoa! Excellent article.

Good on Moodys for speaking up.

This article deserves to be widely distributed.


k&r

[Vinnie From Indy]

3. Yeah, these are the same guys that gave all those AAA ratings to credit default swaps

Moodys is about as reliable and honest as Pete the Drunk at the end of the bar at our local watering hole. What is happening here is the second phase of the all out attack on the average American. Moodys and others will begin screaming incessantly about the deficit and how attacking SS is the ONLY solution to the problem. Bait & switch indeed!

[meow mix]

4. buckle up bush has his 3rd, 4th, 5th term.

this is a disaster

[Autumn]

5. They will become permanent

Obama and the republicans have made sure of that. SS is the exactly what they will use to pay for them, along with cuts to welfare and food stamps. K/R

[RKP5637]

6. We're in a death spiral ... the ultra rich having gamed the system will

do quite well, and the majority of the nation quite poorly ... but since they have made the US just a geographical location, none will care about the destitute of much of America. I feel like I'm working in a corp. where I would have had my resume on the street by now, not that option when it's the country.

We need a revitalized democratic party that stands with the majority of the people.

[bongbong]

8. Death spiral indeed

Once the rich have stolen every penny from America, they will run to some other country. Maybe not all of them, but a fair number will. They will leave behind a country deeply in debt.

I know the PTB have no long-term plan beyond "get as rich as I can", but if I was told they DID have a long-term plan and I had to guess it, I would say the plan is: "Set up America to be the low-cost manufacturing country after Bangladesh & Africa's nations get too overpriced"

Bone up on your camping and farming skills, folks. You're gonna need 'em.

[RKP5637]

13. Precisely the plan. "Set up America to be the low-cost manufacturing country

after Bangladesh & Africa's nations get too overpriced."

[xchrom]

7. Moderates, centrists are a greater danger to this country than republicans. Nt

[RKP5637]

9. Yep! Quite true! They are adding weight to a sinking ship. n/t

[bongbong]

10. I said this many times

This is, obviously, even more appropriate now.

repigs, up until Nov 2 2010: "Deficits! Deficits! TERRIBLE!"
repigs, .05 nanoseconds after the polls closed: "Tax cuts for billionaires! Tax cuts for billionaires! What deficit? You must be dreaming!"

[Jed28]

11. No kidding...

After the tax cuts are made permanent and the cat food commission is done with America, nobody will be paying taxes. The poor, and people earning minimum wage, have nothing significant to offer in the way of taxes. At that point, the whole house of cards has to fall down.

[martymar64]

23. This country needs some sort of tax strike.

How, I don't know. That is for those smarter than I to figure out.
The nation cannot continue on this path for much longer.

Economic collapse of the American Empire is just around the corner and Obama is in the Gorbachev seat.

[aquart]

12. A ray of sunshine on a very dark day.

I did say this capitulation ends up screwing the rich as well as the poor and middle class.

[RKP5637]

14. IMO the really rich will bail out and go for greener pastures in their eyes in

a global economy and portability of monies. They will just play the same game someplace else. I think the really rich will still be ahead no matter what unless the entire world economy melts down. ... but than many will have hoarded precious metals, gems, whatever. ... of course in a real global meltdown that doesn't even matter.

[bongbong]

15. Possibly a part of the 11th dimensional chess game!

This might be a strategy for Obama to use!

"We have been informed by Moody's that the credit rating of the USA might go down if we pass the tax cuts for billionaires. I am changing my decision."

Do you think he'll use this powerful rhetorical weapon?

Nah, me neither. (And Obama was the first politician I donated money to in decades, and the first I volunteered to help in decades. Never again, except locally)

[earcandle]

16. Its all so predictable isn't it. Given that, can't we make alternative plans based on

such predictions... I am talking about we the people, not the
oligarchy in charge.  

Lets ask our new hacker soldiers to invent us a form of
Mondragon trading system so that
we, the people, can trade goods and services with our our
forms of currency based on our labor.

Then let us bypass this crap and watch them fall, while we
hold ourselves together with our new brainhats in place! 

The American spirit, when it is clear, is a powerful mechanism
for change. 

[earcandle]

17. any truly wealthy people still out there can join our leagues as long as they

demonstrate their ethics, logic and passion are for us and not
against us. 
"Us" being, all of we the people of the usa., minus
those who have betrayed us in the last thirty years who are
still alive.   

[harun]

18. Bush's 3rd term is AWESOME !!!!

In a discussion of letting European Countries go bankrupt instead of being bailed out it occurred to me that the U.S. is bankrupt already just that we can print more money (and are).

So our scenario helps us in the short term, but if we keep living like these policies (Reaganomics) actually work, will be devastating in the long term.

The wars should have been ended and all the tax cuts should have expired. Unpopular, but the prescription needed to cure the disease.

[Lydia Leftcoast]

19. In other words, some of the Big Money Boys are against tax cuts for

Big Money Boys. Most Democrats are against tax cuts for Big Money Boys. A majority of all Americans are against tax cuts for the Big Money Boys.

So what does Obama do? Allow tax cuts for the Big Money Boys.

You can't make this stuff up.

[davidwparker]

20. You mean ending them will be like getting out of Iraq,

Afghanistan, and closing GITMO?

[valerief]

21. Well, they COULD slash the WAR/MILITARY budget in HALF.

They could but where would the thieves get their really big money from?

[NeoConsSuck]

22. You nailed it Joanne!

There was an article in the NY Times the other day about how many states are ready to go bankrupt. But will they see any federal aid in 2011? Extremely doubtful. And the excuse from the Republicans will be the DEFICIT! Funny, I didn't hear the deficit mentioned when they wanted tax cuts for the rich!

And why would they want the states to go bankrupt? Because then the state workforce (UNIONS) will be decimated. The same unions that contribute to the Democratic party.

And how about programs to help the poor? HEAP, food stamps, medicaid: We have to cut these programs, remember, the DEFICIT!. That's what you are going to hear from the pukes, the traitors to America.

People really haven't grasped yet how much damage Obama did to the middle and lower class yesterday. He really sold us out, and he hides behind his bullshit statement that he did it to help the middle class. He is either very weak, or he is a weasel. In either case, he is not fit to lead the Democratic party *or* the country.

We need to get a candidate to primary him.

[OlympicBrian]

24. I believe there will be an "unspoken" downgrade in debt rating if the tax package passes

Moody's may not be brave enough to issue a downgrade to US federal debt...

However, I believe there will be an "unspoken" downgrade to the US credit rating if the tax package passes.

This situation will become somewhat cross-contagious with problems at the state level--with municipal bonds.

Also, inflation was written all over the recent Fed beige book, which will act against all the bond markets.

All the above, in turn, will cause people to dump US bonds, which have been in a bubble.

[OlympicBrian]

25. In case you missed story about state debts

As I said, I believe there will be some debt cross-contagion fears between the US state and federal government level--which will affect all US debt.

It will likely even extend to include US corporate issues. Here is the story about debt at the state level, in case you missed it:

Mounting Debts by States Stoke Fears of Crisis
http://www.nytimes.com/2010/12/05/us/politics/05states.html?nl=todaysheadlines&emc=a2

Notice especially the graph.
http://www.nytimes.com/imagepages/2010/12/05/us/05states_graphic3.html?ref=politics