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Great analysis on the debt ceiling and why all these cuts should've been put in during the April budget:
âWhat fresh hell is this?â â Debt Ceiling Antics: Buy Now, Squabble Later | CY Interview
The Club for Growth and Heritage Action for America say votes for the deal will be considered when compiling their annual scorecards, which are aimed at letting voters know how their representatives and senators rate when it comes to fiscal issues. "The deal relies on an insufficient level of cuts, a 'super committee' tasked with brokering a grand bargain that will lead to massive tax hikes, massive defense cuts or both. It remains insufficient to the task at hand," says Heritage Action for America, the lobbying arm of the Heritage Foundation.
Andrew Roth, vice president for government affairs at the fiscally conservative Club for Growth, is equally adamant about what he perceives as the proposal's shortcomings. "The problems with this proposal are many, but fiscal conservatives should have obvious concerns for the lack of guaranteed future spending cuts, no requirement that a balanced budget amendment to the Constitution be sent to the states, a commission that could still recommend job-killing tax increases, and worse of all, two debt limit increases totaling over $2 trillion within only a matter of month," he said.
Groups on the left are also opposed. Justin Ruben, executive director of MoveOn.org, which has 5 million members, says the deal is overloaded with stuff that will force cuts to programs that help the middle class -- without imposing harm on the wealthy. "This is a bad deal for our fragile economic recovery, a bad deal for the middle class and a bad deal for tackling our real long-term budget problems," Ruben said.
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While the debt ceiling compromise reached over the weekend is undeniably good news, it's not a cause for raucous celebration. The economy is growing at a clip that's far more tortoise than hare. Sure, the turtle eventually won the race. But this economy needs some short-term momentum right now, not slow and steady expansion. The unemployment rate remains uncomfortably high as employers have cut back on the pace of hiring. The housing market is still in shambles. And the manufacturing sector, which had been a bright spot in the first half of the year, is starting to cool off too.
Add that all up and it's no wonder that long-term Treasury rates are continuing to slide. The 10-year Treasury is currently at 2.73%. That's the lowest it's been since last November. All the worries about interest rates shooting up are in some respects misplaced. Yes, Standard & Poor's and/or Moody's may still wind up downgrading the credit rating of the U.S. And that would put some upward pressure on rates.
But all signs point to the 10 year yield falling even further. As long as the economy remains mired in a slow-to-no growth recovery -- some economists are using the silly term of "growth recession" to describe the current malaise -- not even a downgrade from AAA to AA would do much to change that. "The impact of a downgrade could be relatively modest. The economic picture is what really is driving interest rates," said Krishna Memani, director of fixed income with Penholder in New York. He added that the concerns about the debt ceiling and deficit have been a "sideshow."
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The government will borrow $72 billion in debt auctions next week now that Congress has raised the nation's borrowing limit. The Treasury Department says it will sell 3-year notes, 10-year notes and 30-year bonds to raise the money. About one-third will go to repay debts that are due on Aug. 15.
President Barack Obama cleared the way for the auction on Tuesday when he signed into a law a bill that raises the debt ceiling and promises more than $2 trillion in cuts to government spending over the next decade.
Treasury's advisory group of private bond sellers agreed that credit rating agencies are unlikely to downgrade the nation's sterling credit rating now that fear of a default has been lifted.
http://cnsnews.com/news/article/us-government-repaying-debt-more-debt
