Today, the Debt Default Clock Review Committee completed its second update of the Debt Default Clock. The Debt Default Clock estimates how much relative time remains before the Federal government’s fiscal policies lead to a fiscal crisis resulting in major disruption to the American economy and the treasury securities markets. The Review Committee has seen continued deterioration in the Federal government’s fiscal position since the initial assessment and has concluded that the clock now stands at four minutes to midnight.
Baker Spring, Chairman of the Review Committee, said, “The Review Committee believes the large absolute amount of outstanding Federal government debt, and the burgeoning size of these obligations relative to the United States economy, along with the predominantly short-term maturity structure of Government debt, which subjects the federal government’s budget to significant refinancing risks and increasing interest rate risk, combined with the potential for foreign investor manipulation of our bond markets, all have placed the United States in an increasingly perilous fiscal position.”
Dean Clancy, a member of the Review Committee, said “The current stalemate in the U.S. Congress and its inaction and inability to address these critical fiscal and monetary issues in a meaningful way has led to the Committee’s decision to advance the clock closer to the midnight hour.”
In addition to the Default Clock update, the Federal government’s credit score that was developed by the Review Committee remains in the “POOR” category.
The Review Committee is an initiative of Compact for America Educational Foundation, Inc. The Foundation is a U.S. 501(c)3 non-profit educational corporation that provides leadership and guidance to state governors, state legislators, and members of Congress and the Administration in having states resolve national issues of importance that the U.S. Congress is either unable or unwilling to address.