Virginia Governor Bob McDonnell (RTP-VA) who was elected with Tea Party support last year broke with the Republican Tea Parity abruptly today on the debt ceiling. He said at a news conference, “Congress needs to compromise and compromise right away [to solve this debt ceiling crisis].”
What prompted this high profile break with the Republican Tea Party? Moody’s came a calling.
Virginia was warned that its credit rating may be downgraded if U.S. defaults. .According to reports, Moody’s told Virginia officials that if the U.S. defaults on its debt, Virginia’s credit rating will be downgraded even though the state has had two consecutive years of budget surpluses.
The reason, the state is home to so many federal employees and military. If the U.S. debt ceiling is not increased, those employees may not get checks, or perhaps furloughed, and maybe even laid off permanently. Without that income the state would suddenly find itself unable to pay its bills. Local governments will also be downgraded for the same reason.
We are in fact one nation.
Governor McDonnell needs to lobby his own Congressman
The Governor does not need to go far to convince Congress what they are doing is reckless not only to the Federal Government, but to the entire nation. His representative in Congress is Rep. Eric Cantor (RTP-VA). Cantor has been the leader of a group of Tea Party Republicans who refuse to raise the debt ceiling, or at least not unless it is on their own terms. Of course, no one knows exactly what those terms are since they change with the wind.
There is no word about whether the Governor has communicated his rebirth to Cantor or his fellow Tea Party Republicans.
The other 49 states are in the same boat with their credit ratings as well
Virginia might have been the first, but this message will eventually get to all 50 states and all cities. Washington is not Las Vegas. What happens there will not stay there when it comes to default. Every state has federal workers that will not be receiving checks to pay state and local taxes or sales taxes. This will immediately affect state revenue. Most states are battling deficits as it is.
Furthermore, the shortage of funds will mean a stop to state block grants, highway funds, and other monies as the Treasury Dept. prioritizes which of the $174 billion dollars in bills it does not pay each moth.
This crisis will create an immediate recession, and states will suffer the after shock of that. The U.S. economy will falter, and it will roll across this land to paraphrase the famous song.
Hopefully Governor McDonnell will call his fellow Governors and persuade them to send a message to their Congressmen before it is too late.
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