On May 16, 2025, Moody’s downgraded the rating of US debt from AAA (Aaa) to AA+ (Aa1). What does this mean and what does economics have to tell us about it.
On industrial subsidization; please respond. If a direct subsidy, then there is the problem stated, but if an indirect subsidy like tax relief, I cannot see the problem. If an employer is allowed 125% (n-number) direct write-off per employee wages and like amount per capital investment to employ said employee, then a percentage of profitability or loss offset is guaranteed.
The reduction in tax cash flow to government coffers could ostensibly be offset by employee income taxes, especially if the employer increased his number of employees to an optimal-to-needs rather than minimal-to-needs levels typical of usual thinking. Might take a bit of futzing with tax codes, but that task is long over due anyway.
Throw in a caveat demanding the definition of qualified employee is that they are an American citizen it is a straight up win for America. This scheme eliminates the negative cash flow from treasury-to-business outright, and probabilistically increases positive taxation cash flow into treasury as employee rolls increase. I'm pretty sure there is a magic ratio to be established in there somewhere.
Likewise, if governance allowed for like write-off policy for repatriated capital invested in national self-sufficient prioritized production facilities and the means to meet or exceed employee and environmental protection regulations, I don't see how that isn't a sure winner too. Will it take time? Yes; but not too much if American exceptionalism is in play I'd wager. A much better means to MAGA ends in my opinion. Or am I wrong and if so, where?
Thank you for an informative article. Helps me understand. However which two companies achieved the perfect rating?
Thank you for the nice feedback!
Totally forgot to add it - it's Microsoft and... Johnson & Johnson
In short; the power of the carrot exceeds the power of the stick by many orders of magnitude where human ideals and profitability coincide. No?
On industrial subsidization; please respond. If a direct subsidy, then there is the problem stated, but if an indirect subsidy like tax relief, I cannot see the problem. If an employer is allowed 125% (n-number) direct write-off per employee wages and like amount per capital investment to employ said employee, then a percentage of profitability or loss offset is guaranteed.
The reduction in tax cash flow to government coffers could ostensibly be offset by employee income taxes, especially if the employer increased his number of employees to an optimal-to-needs rather than minimal-to-needs levels typical of usual thinking. Might take a bit of futzing with tax codes, but that task is long over due anyway.
Throw in a caveat demanding the definition of qualified employee is that they are an American citizen it is a straight up win for America. This scheme eliminates the negative cash flow from treasury-to-business outright, and probabilistically increases positive taxation cash flow into treasury as employee rolls increase. I'm pretty sure there is a magic ratio to be established in there somewhere.
Likewise, if governance allowed for like write-off policy for repatriated capital invested in national self-sufficient prioritized production facilities and the means to meet or exceed employee and environmental protection regulations, I don't see how that isn't a sure winner too. Will it take time? Yes; but not too much if American exceptionalism is in play I'd wager. A much better means to MAGA ends in my opinion. Or am I wrong and if so, where?