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- Firm, long term federal funding commitment in transportation is key to avoid a credit downgrade and is a prerequisite to state action Hirsch 4/4/12
- Only federal action generates local investment in transportation—budget woes and uncertainty make it impossible now Hirsch 4/4/12
- Predictable USFG funding is key to business confidence and preventing a credit downgrade--- absent this, a downgrade turns state/local solvency Holeywell 12
- Only firm federal action and funding solve—the alternative is increased pressure on local governments Kavinoky 5/13/12
- The credit rating is the foundation of the US economy and downgrade turns CP solvency because it hamstrings local government Foster 11
- Further downgrade will collapse the economy—all fiscal cushions are gone Goldwein 11
credit downgrade DAAbsent federal commitment to transportation, the US will be a “credit crisis”—that hamstrings state action Szakonyi 4/5/12 (Szakonyi, Mark, Associate Editor of the Journal of Commerce, April 5, 2012, “S&P: Agency says crisis possible if infrastructure, transportation funding not met ”, Journal of Commerce, http://www.joc.com/infrastructure/sp-warns-another-credit-crisis)FS Standard & Poor’s said the U.S. government’s inability to provide long-term infrastructure and transportation funding could create another credit crisis. The warning from the rating agency, which downgraded the U.S. credit rating in August, comes as Congress struggles to approve a multiyear surface transportation bill. Congress on March 29 approved a three-month extension of highway funding after the House failed to pass its five-year, $260 billion plan to match the Senate’s already approved two-year, $109 billion bill. S&P warns “reduced or unpredictable federal support and lower demand could result in deferred maintenance projects that would keep our nation’s transportation infrastructure in good repair,” according to The Fiscal Times. Few transportation analysts expect Congress to approve a plan by the end of the year, making it difficult for state transportation agencies to commit to long-term projects. Firm, long term federal funding commitment in transportation is key to avoid a credit downgrade and is a prerequisite to state action Hirsch 4/4/12 (Hirsch, Michelle, April 4, 2012, “S&P Credit Risk From Highway Funding Delays”, The Fiscal Times, http://www.thefiscaltimes.com/Articles/2012/04/04/SP-Credit-Risk-from-Highway-Funding-Delays.aspx#page1) FS Standard & Poor’s, which downgraded the U.S. credit rating last August after the government came close to defaulting on its debt, is now warning that another credit crisis could occur unless the government adequately funds long-term transportation and infrastructure spending. In a new report, the major credit rating agency, which called highway, bridge and other transportation projects “the backbone of the U.S. economy,” raised concern that Congress has yet to pass a permanent extension of the U.S. highway spending bill. The latest continuing resolution, the 9th temporary extension, was approved by Congress on March 29 before lawmakers adjourned. While the three-month extension will provide short-term spending for states and localities as they prepare for the summer construction season, many state officials remain concerned about the fate of long- term projects and planning. The federal government supplies states with about 45 percent of their funding for roads and bridges, according to the American Association of State Highway and Transportation Officials. “The combination of reduced or unpredictable federal support and lower demand could result in deferred maintenance projects that would keep our nation’s transportation infrastructure in good repair,” the S&P report stated. “Such deferrals could hurt an entity’s credit if capital costs escalate over time, putting the system at risk.” State governments finance major highway and bridge projects with revenue-backed bonds, or so-called GARVEE debt-financing instruments backed by a pledge of future federal aid for debt service. But if the federal revenue stream is uncertain or disrupted, state governments may have trouble marketing those bonds or need to pay a higher interest rate. “The political gridlock in Washington, D.C., and the doubt surrounding federal funding are making it difficult for issuers throughout the infrastructure sector to define long-term plans for funding necessary capital projects,” the S&P report states. Only federal action generates local investment in transportation—budget woes and uncertainty make it impossible now Hirsch 4/4/12 (Hirsch, Michelle, April 4, 2012, “S&P Credit Risk From Highway Funding Delays”, The Fiscal Times, http://www.thefiscaltimes.com/Articles/2012/04/04/SP-Credit-Risk-from-Highway-Funding-Delays.aspx#page1) FS Projects on the Backburner A survey by The Fiscal Times of state transportation officials found that in the wake of the latest congressional action, states are putting many of their major long-term projects on the backburner while focusing on basic repairs of dilapidated roads and bridges. Serge Phillips, federal relations manager for the Minnesota Department of Transportation, complained that his state has been in a holding pattern on federal aid for two years, and is worried about how much longer this uncertainty will continue. “We’re trying to problem-solve, to look at things statewide, continuing to protect public safety with repairs and provide for mobility and work on congestion,” Phillips said. “That doesn’t go away. Those are things we can’t compromise on. We’re trying to get by.” Brent Walker, a spokesman for the West Virginia Department of Transportation, said that the inability of Congress to agree on permanent new legislation “certainly puts us in limbo.”“We try to plan out every six years,” Walker said. “If this goes on, we’d have to continue to practice triage, only in a bigger way because we’d be uncertain about the future.” But putting many long-term projects on the shelf, while necessary for now, could seriously harm the economy in the long term, transportation experts say. The repeated extensions of spending authority mean that states are unable to position themselves for the type of economic growth needed to put Americans back to work, according to Janet Kavinoky, executive director of transportation and infrastructure at the U.S. Chamber of Commerce. “Infrastructure is a long-term proposition. It’s not a cheap date,” Kavinoky said. “It’s more like a marriage. States are doing sprints when they should be doing marathons.” David Parkhurst, director of the economic development and commerce committee at the National Governors Association, added, “The uncertainty definitely chills long-term, multi-phase projects as far as when states may pull the trigger on them.” Predictable USFG funding is key to business confidence and preventing a credit downgrade--- absent this, a downgrade turns state/local solvency Holeywell 12 (Holeywell, Ryan, “Transit Funding Faces Uncertain Future”, February 8, 2012, Governing: States and Localities, http://www.governing.com/blogs/fedwatch/transit-funding-faces-uncertain-future-in-house-bill.html)FS “The business community has grave concerns about this,” said Janet Kavinoky, who leads the Chamber's transportation efforts, during the call. Business owners have a vested interest in transit since they want their employees to have a reliable way to get to work. Developers also have an interest in seeing transit projects go forward. William Anker, a former secretary of Louisiana's transportation department, says if the House's changes become reality, ratings agencies may downgrade the credit ratings of jurisdictions involved with transit, given the heightened risk that comes with a less dependable funding stream. That would increase their cost of borrowing. He says the change could also affect the outlook for public-private partnerships in the transit field, since the private-sector would likely want to see governments take on a greater share of the financial risk, given the unpredictability of funding.
(Kavinoky, Janet, executive director of transportation at the Chamber of Commerce, May 13, 2012, “Longterm Funding Needs To Hit The Road, Jack”, Politico, http://www.politico.com/news/stories/0512/76244_Page2.html) It has been suggested that federal transportation programs be eliminated and the responsibility left to the states. “Devolution,” as it’s called, is unworkable and ill-advised. Governors, state legislators, mayors and city council members are not prepared to increase local revenues to take on this huge liability. States and metropolitan areas already are strapped for cash and using transportation trust funds to balance budgets. Without federal funding and the policy and programmatic structures to support them, states cannot be expected to act on their own to ensure that interstate commerce, domestic and international trade, interstate passenger travel and emergency preparedness are adequately supported by the transportation infrastructure in their care. And where will funds come from to seed the public transportation investments to address traffic congestion, mobility and productivity in the economic engines of the U.S. economy — our cities? Some people wrongly argue that investment in transit is a less than serious, utopian enterprise. The Chamber strongly believes transit is a critical means of addressing congestion and is driving economic development in many areas around the country. These red herrings, accepting major funding cuts or devolving federal programs to the states, are not real solutions. Congress and President Barack Obama must work toward passage of a bill out of conference before June 30. The nation cannot afford for them to fail in finding a way to sustain federal funds through 2013 or to address many of the inefficiencies of current federal law. Then, before the ink on their agreement dries, we have to get back on the road to a serious conversation about long-term funding for transportation that modernizes American infrastructure and promotes economic stability.
(Foster, J.D., PhD and Senior Fellow at Heritage, August 6, 2011, “US Credit Rating: Now They’ve Done It”, Heritage, http://www.heritage.org/research/reports/2011/08/us-credit-rating-downgraded-now-theyve-done-it)FS Taken in isolation, a credit rating downgrade will eventually mean higher interest rates on U.S. government debt. This may be hard to imagine given the recent drop in Treasury bond rates in response to events overseas. But higher future rates are certain, and that means that even more federal tax dollars must be dedicated to paying the interest on past government excesses. Higher interest rates and interest cosns greater deficit pressures, which can mean more debt, which can lead to higher interest rates. This is why it is termed a debt spiral.
(Goldwein, Marc, policy analyst for the fiscal policy program at the New America Foundation and was Associate Director of the National Commission on Fiscal Responsibility and Reform, “Drawing a AAA-Road Map for Post-Downgrade America”, August 11, 2011, The Atlantic, http://www.theatlantic.com/business/archive/2011/08/drawing-a-aaa-road-map-for-post-downgrade-america/243463/) If rating downgrades don't augur immediate crises, they tend to indicate trouble on the horizon. Of the 10 other countries that have been downgraded from AAA, eight experienced further downgrades and five have still never recovered their AAA rating. Deeper downgrades have been associated with interest rate spikes, and the fact that both S&P and Moody's have us on a negative outlook suggests that more downgrades could be in our future. What are the consequences of further downgrades? The most direct one could be higher interest rates, as investors insist on a risk premium. Even a 0.1 percent increase in interest rates would mean an additional $130 billion in government spending on interest over the next 10 years that we would have to offset in hiring taxes or fewer investments to meet the same debt goal. A 0.7% increase in interest rates would be enough to erase all of the gains from the recent debt deal. In addition, higher interest rates could reverberate throughout the market, impacting everything from mortgages to small business loans - and ultimately leading to something economists call "crowd out," where fewer dollars go into growth-driving investments. The biggest concern, though, should be that these rating downgrades could advance the day of a fiscal crisis. At some point, if we don't make some changes, investors will lose confidence in our nation's ability to make good on its debt. When that occurs, it is possible we could experience a global economic crisis akin to the financial crisis of 2009, except with no one available to bail out the U.S. government. Directory: files files -> Answer True False 2 points Question 2 files -> Integer programming and game theory files -> 4 Integer Programming files -> Bpa vehicle Window Repair Scenario #1 task: Procure vehicle window relacement. Objective files -> Pop Warner History files -> North Carolina Inclusion Initiative Mapping Where Children with ieps are Being Served Purpose files -> Fall 2013 Spring 2014 Program Data: Standard 1 Exhibit 4d files -> Hanban – asia society confucius classrooms network 2010 request for proposal files -> Northern England’s set-jetting locations Download 1.1 Mb. Share with your friends:
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