Moody’s Investor service has warned us that the credit ratings for five states will be downgraded if the federal government dictates.
We, along with Maryland, New Mexico, South Carolina and Virginia have been placed on review to downgrade our triple A bond ratings.
A triple A rating is the highest for debt and tells investors an institutional borrower presents a minimal credit risk.
We, Tennessee, Bradley County wer put on notice last week as the White House and Congress continues to battle it out over the debt ceiling.
As many of you know the federal government met its borrowing limit in May. The Us Government will default if there is not some type of agreement by August 2nd , 2011.
If you have noticed the trend in Bradley County is that if a dollar comes from DC it flows to BC (Bradley County) pretty quickly in the form of a “loan” to us secured often in bonds and TIF financing and the likes.
Our locally elected leaders much like our appointed leaders in DC have the spending disease that is bankrupting our country as well as our community.
The trend is causing the Department of Treasury to “review” or “reassess” the states credit risk or the credit worthiness and their ability to pay back these bonds, these loans if you will.
We have borrowed too much, that trickle down effect has caught up with us, much like our own family budget, we can only spend so much till we are broke, then we go belly up or cut back or some combination of both!
A potential downgrade would raise interest rates on US Treasury bonds, increasing the interest that taxpayers pay those who buy those bonds. It will also push up rates for mortgages, car loans and other debts that are linked to treasury rates.
The biggest impact would be on the states that depend mostly on those that rely on Federal revenues and those with more federal workers, contracts and Medicaid expenditures among other things.
The federal government recognizes the fact that Bradley County and the state of Tennessee has assumed a great deal of debt and that cutting back on the credit rating will also affect our local economy negatively.
In this deal the federal government will also cut back on programs that benefit the state such as medicaid, the states budget and finances which will eventually trickle down to Bradley County.
The bottom line is lower credit ratings can affect the states ability to issue debt, by making it more expensive to do so and if it is more expensive to deliver that credit the cost gets passed on to the taxpayer in the form of higher taxes.
Our local government and the state need to reign in our spending, we are broke, no way of mincing words. In a down economy and we continue to spend as we do we are being very irresponsible in our efforts.
We in Bradley County are facing tens of billions in “growth” which should be interpreted as “debt”
We must stop this onslaught of receiving federal grants, forming alliances with large corporations and robbing peter to pay Paul with the many bonds and TIF programs.
We are doing our community a disservice by continuing to spend as if we have an endless supply of capital, we don’t, we only have credit, a bond rating and that gift horse is about to be bridled by taking the credit ability away.
I cannot spell our counties and states failure any better than we have just ruined our credit rating, we are a risk now, we have spent ourselves here by accepting the millions from the state via the Tax and Spend tactics of the Obama Administration.
No amount of warning could have stopped the spending express which is our local Bradley County and city governments. We are the recipient of some very poor decisions, now we must pay the piper!
Contributing source: The Chattanooga Times Free press