December 14th, 2010, Fairfax, VA—Americans for Limited Government (ALG) President Bill Wilson today issued the following statement on the possible downgrade of the U.S. Aaa credit rating by Moody's:
"Because the tax deal now under consideration does not include drastic spending reductions, there will likely be a $1.5 trillion deficit in 2011. As a result, Moody's is once again warning the U.S. that the agency may switch the outlook on U.S. debt to negative next year if the deal passes as proposed. Because there is a strong bipartisan consensus not to increase taxes during a severe economic downturn and risk a double-dip recession, our fiscal house can only be brought into order, and the $13.8 trillion debt reined in, with spending cuts.
"The warnings from sovereign credit ratings agencies could not be more clear. If Congress passes the tax deal without cutting the budget deficit, the likelihood of a credit downgrade increases substantially. A credit downgrade will increase borrowing costs, threaten the dollar's status as the world's reserve currency, and risk another global financial meltdown. Is that the legacy lawmakers really want on their consciences? Is that the account they want their grandchildren to read in the history books in 20 years?
"Nobody can claim with a straight face that the spiraling national debt is a 'long-term' or even a 'mid-term' problem. The debt is an imminent threat to the nation's prosperity. Now is the time to cut spending. A recent International Monetary Fund study shows that successful fiscal consolidation programs globally have relied primarily on spending cuts, not tax increases. The choice is clear for lawmakers going forward. Either Congress cuts spending now, or else the U.S. will become the latest, largest victim of the sovereign debt crisis. It can happen here."