Moody’s: You know what? Just scrap the debt limit altogether

Moody’s Investor Service has once again warned the United States government that it might lose its AAA bond rating if it can no longer meet its obligations to creditors, which will happen soon if lawmakers fail to raise the statutory debt limit by August 2. In issuing that admonition, Moody’s has also proposed a novel solution, of sorts, to the current impasse over the debt ceiling: Just get rid of it.

Constitutionally, only Congress can approve the issuance of debt to fund government spending. When it was passed by Congress in 1917, the statutory debt limit was designed to give the administration some flexibility, by allowing Congress to approve the issuance of debt in bulk, up to a certain amount. Now, every time the administration inches closer to that amount, Congress has to raise the limit so the government can keep borrowing money to pay for its spending.

That system, according to a report issued by Moody’s analyst Steven Hess, has created “periodic uncertainty” over whether the U.S. can continue to meet its obligations to creditors, Reuters reported Monday. “We would reduce our assessment of event risk if the government changed its framework for managing government debt to lessen or eliminate that uncertainty,” Hess wrote.

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Elizabeth Warren tapped to set up new consumer agency

Updated | September 17 President Obama on Friday appointed Elizabeth Warren, a Harvard professor and vocal critic of Wall Street, to help set up the government’s new Consumer Financial Protection Bureau, a centerpiece of the financial overhaul passed by Congress earlier this year. Warren first proposed the creation of the new consumer agency, which will consolidate a vast array of regulatory powers across the federal government, and was widely expected to chair the bureau.

Instead, Obama deputized Warren as an assistant to the president and special adviser to the Treasury secretary, Timothy Geithner, allowing her to effectively run the new agency without enduring a bruising confirmation battle in the Senate. Warren, who has been championed by consumer advocates but derided by business groups as a partisan and political neophyte, would almost certainly have faced a filibuster from Senate Republicans.

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A tax even my dad can get behind

Photo: NewYorker.com

Reading The Financial Page in this week’s New Yorker on the subway this morning got me so fired up that I was tempted to turn to the guy standing next to me to express my outrage. Knowing nothing about him, I was sure he’d agree.

James Surowieki, arguing for a millionaire tax bracket, writes that currently:

[S]omeone making two hundred thousand dollars a year and someone making two hundred million dollars a year pay at similar tax rates. LeBron James and LeBron James’s dentist: same difference.

But it’s the numbers he cites about the concentration of wealth in this country that really make the blood boil: Read All »