Moody’s threatens downgrade if debt-to-GDP ratio not stabilized and reduced

Sept. 11, 2012, Fairfax, VA—Americans for Limited Government President Bill Wilson today responded to the threatened credit downgrade by Moody’s should the U.S. not stabilize and then reduce its debt-to-GDP ratio over the medium term:

“AA will be Obama’s scarlet letter. Moody’s has set out very real metrics for lawmakers and Obama to avoid another credit downgrade. The debt-to-GDP ratio must be stabilized and then reduced over the medium term as a result of this year’s budget negotiations.

“Right now, although the budget deficit will be about $1.2 trillion this year, the nation’s full borrowing obligations will be more like $1.45 trillion once certain off-balance sheet items are taken into account. However, the economy is only growing at an annualized pace of about $570 billion.

“Therefore, just to stabilize the debt-to-GDP ratio this year alone would require a full $890 billion of deficit reduction. S&P has already taken the drastic measure of eliminating the triple-A status of U.S. treasuries. Since Obama and Congress will come nowhere near to cutting $890 billion from the budget or raising that much revenue, they will undoubtedly fail to stabilize the debt-to-GDP ratio, so everyone should begin pricing in the downgrade. It’s an inevitable national shame.”

Interview Availability: Please contact Rebekah Rast at (703) 383-0880 or at to arrange an interview with ALG President Bill Wilson.