Moody’s Reality Check

By Peter Galuszka

Moody’s Rating Service is about to pull the rug from under U.S. Rep. Eric Cantor and Gov. Bob McDonnell. It’s about time they had a reality check but too bad it will be so expensive.

Moody’s says that Virginia is one of five states whose credit it might downgrade if the federal government misses its deadline to raise the debt ceiling and go into default. A primary reason is that Virginia depends very much on federal jobs given its proximity to Washington and its many military bases.

This may be news to Eric Cantor, the House Majority Leader, who is pushing a childish campaign to demolish any negotiated deal for raising the debt ceiling while addressing federal spending.

After voting for just about every budget hike George W. Bush presented, Eric the Boor, is now playing Tea Party by insisting on huge federal cuts while playing chicken with our future.

He seems to think that it is good politics to run head of the Tea Party parade while also servicing his biggest campaign donors, namely Goldman Sachs, Bank of America, Capital One Financial, and others. They all stand to pay more if some of Grand Bargains go through. Managers of billion dollar and largely unregulated hedge funds might have to (sniff, sniff) pay 15 percent extra in fees. The ultra-rich might have to pay more taxes. Imagine!

Bob McDonnell is trying hard to be our Jobs Governor. He says he’s created thousands of private sector jobs while balancing the budget.

He seems to forget just how dependent Virginia is on the evil federal government which might not be able to write checks after Aug. 3.

Both Cantor and McDonnell have made careers playing the anti-tax, anti-spending, anti-Washington game. It is make believe given the reality of the state’s true employment picture and who pays the bills.

Want to see how it affects you and me? If Moody’s takes us down a peg, then we’ll all be paying more for Transportation Secretary Sean Connaughton’s billions in bonds for questionable roads. Virginia’s years-old reputation will be squandered.

And who will have done it? The very people who claim to be the most fiscally responsible.

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5 responses to “Moody’s Reality Check

  1. Peter, Peter, Peter …

    This childish standoff on the debt ceiling is yet another example of both parties behaving like drunken high school students at a pep rally. The debt ceiling will be raised and the federal spending orgy will continue – with both parties shoveling our money to their rent seeking supporters in corporate America.

    However, this too will end. And probably sooner rather than later. The federal government spends way, way too much. It’s catastrophe in flight. Jim Bacon’s book Boomergeddon provides a good glimpse into the likely future. So does Greece, Italy, Ireland and many other countries in Europe.

    The federal government will have to cut spending – with or without tax increases.

    And that’s what will eventually sink Virginia’s bond rating and overall economy. Much could have been done to limit the impact of this inevitable spending decline. It has been foreseeable for years. Yet the bozos we send to Richmond year after year have done virtually nothing. In fact, they tout their very sloth and ineffectiveness. “We didn’t raise the gas tax.”. “We defeated gay marriage.”. “We don’t change our public universities.”.

    Our elected representatives are defined only by what they have not done.

    In the adolescent battles now raging between Cantor and Reid, McConnell and Pelosi, Obama and Romney a bell is tolling. For whom does the bell toll? It tolls for thee Virginia.

  2. Groveton,
    You mean:

    “Sic Semper Tyrannis?”

    (sic, forgot Latin)

    PG

  3. ” The federal government spends way, way too much. …..
    The federal government will have to cut spending – with or without tax increases.”

    so far.. I’ve not seen a list of “cuts” from the folks who say “we have a spending problem”.

    Once again.. it’s important to realize that the CURRENT 1.5 trillion deficit has little to do with the CURRENT Social Security “problem”.

    The CURRENT 1.5 trillion deficit is primary composed of 3 major areas.

    Medicare Part B (C&D) (all 3 are taxpayer subsidized), MedicAid (which about 40% of pays for nursing homes for the elderly), and the Military (as well as the 2 wars).

    We have fire and brimstone from the Cantorites but almost no substance.

    Rather a political tantrum accompanied by hands over eyes and ears.

  4. As a fiscal conservative, why is Cantor wasting public money on this childish standoff and the purely symbolic “Cut, Cap, and Balance” nonsense?

  5. Peter, I think you dropped the ball big time on this one with respect to the transportation bonds. The borrowing plan that McDonnell pushed through is the very same borrowing plan that Kaine got through the General Assembly, except that the new plan sells bonds quicker. The funding for the bonds is the same under McDonnell and Kaine – the tax on auto insurance premiums plus the state tax on the wholesale price of gas that is paid by service station owners. Essentially, McDonnell and Kaine did the very same thing and are using the same sources to fund the bond repayment. The Secretary of Finance, who is the same individual for both Kaine and McDonnell, has stated these funds will be sufficient pay off the bonds.
    I think the GOP’s bragging about the greatness of the funding plan is hollow, but the Democrats’ howling is totally hypocritical. How can the same basic plan be better now? How can the same basic plan be terrible now?

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