Credit rating agency Moody’s has cautioned that a government shutdown could harm America’s credit rating.

While it said that a short-lived shutdown would ‘unlikely disrupt the economy,’ it would ‘underscore the weakness of US institutional and governance strength’ of the US compared to other top-tier economies. 

Moody’s is the last major ratings agency to still have assigned US its top rating of AAA. 

Last month, Fitch, another major ratings agency, dropped the US rating from AAA to AA+, citing the country’s $33 billion debt and ‘a steady deterioration in standards of governance.’

On Monday, Moody’s echoed that sentiment, saying a shutdown would highlight the constraints that ‘intensifying political polarization put on fiscal policymaking at a time of declining fiscal strength.’

‘Looking ahead, weaker fiscal policymaking that leads to persistently high fiscal deficits and higher than expected interest costs would put pressure on the US rating or outlook,’ Moody’s wrote in a statement.

If Congress this week fails to provide funding for the new fiscal year, starting on October 1, government services would be disrupted and hundreds of thousands of federal workers would be furloughed without pay.

Moody’s analyst William Foster told Reuters the shutdown would be evidence of Washington’s weak policymaking in the face of financial pressures brought about by high interest rates and the country’s substantial $33 billion of debt.

‘If there is not an effective fiscal policy response to try to offset those pressures… the likelihood of that having an increasingly negative impact on the credit profile will be there,’ said Foster.

‘And that could lead to a negative outlook, potentially a downgrade at some point, if those pressures aren’t addressed.’

Moody’s rates the US government AAA with a stable outlook – the highest creditworthiness it assigns to economies.

‘Fiscal policymaking is less robust in the US than in many AAA-rated peers, and another shutdown would be further evidence of this weakness,’ Moody’s said.

President Joe Biden’s top economic adviser, Lael Brainard, said the Moody’s comment highlighted the importance that Congress reaches an agreement.

‘Today’s statement from Moody’s underscores that a Republican shutdown would be reckless, create completely unnecessary risks for our economy, and lead to disruptions for communities and families across the country,’ Brainard, director of the National Economic Council, said in a statement.

‘Congress must do its job and keep the government open.’

A Treasury spokesperson said the Moody’s report delivered ‘further evidence that a shutdown could undercut our current economic momentum’ at a time when inflation and unemployment were both below 4 percent.

Moody’s said the economic impact of a shutdown would likely be limited and short-lived, with the most direct effect from lower government spending, and the negatives growing the longer the shutdown lasts.

Congress so far has failed to pass any spending bills to fund federal agency programs amid a Republican Party feud. The shutdown would not affect government debt payments. 

Earlier this year political feuding around lifting the US debt limit threatened to cause a US sovereign debt default.

Although the crisis was eventually resolved before any debt payments were missed, it was a major factor leading to Fitch’s downgrade last month.

‘In this environment of higher rates for longer and pressures building on the debt affordability front, it’s that much more important that fiscal policy can respond,’ said Foster, from Moody’s.

‘And it looks increasingly challenged because of things like the government shutdown and having come off the debt limit episode, because it’s such a polarized political dynamic in Washington,’ he said.

Rising gas prices push up the rate of annual inflation to 3.7% – the second consecutive rise THIS YEAR – but experts insist interest rates will remain steady

• Prices rose 0.6 percent month-on-month, driven mainly by a jump in gas prices
• Despite the rise, the Fed is expected to hold interest rates steady next week
• Core inflation, which excludes volatile food and energy prices, remained mild  

By Tilly Armstrong Consumer Reporter For Dailymail.Com

Updated: 10:38 EDT, 13 September 2023

Millions of high-earning Americans to lose popular 401(K) tax deduction – here’s what it means for YOU

• Workers aged over 50 making catch-up contributions to their 401(K)s will only be able to funnel them into a Roth account from next year
• It means they will be taxed upfront – rather than when they withdraw the money
• READ MORE: Is a Roth 401(K) REALLY a good idea? Finance guru issues warning

By Helena Kelly Consumer Reporter For Dailymail.Com

Published: 11:49 EDT, 17 July 2023 | Updated: 08:33 EDT, 2 August 2023

Homeowners looking to give their properties an eco-friendly makeover could save thousands of dollars over the next few years thanks to a host of new Government initiatives.

Last summer, Congress passed the Inflation Reduction Act which included a $9 billion rebate package aimed at incentivizing households to boost the energy efficiency in their homes.

Already homeowners can save 30 percent on the cost of installing solar panels on their roof, while motorists can benefit from a $7,500 tax credit on certain models of electric cars.

But a host of new initiatives are set to be administered separately by each state. The size of payments will depend on household income and where the owner lives. 

Such benefits will be added to existing tax credits on offer for eco-friendly products such as heat pumps, solar panels and electric vehicles. The new rebates will last until at least 2032. 

They form part of President Joe Biden’s ambitious climate plan which aims to cut greenhouse gas emissions in half in the US by 2030. 

And more efficient homes can also help households stave off energy bills which have been pushed up as a result of Russia’s invasion of Ukraine.

Figures from the National Energy Assistance Directors Association show that the average US household has seen its energy bills for June, July and August increase by 11.7 percent compared to last summer. For those three months, homeowners will have paid an average of $578, the data shows.

Kara Saul-Rinaldi, a clean-energy policy strategist in Washington, D.C., told the Wall Street Journal that a low-income household could claim up to $22,250 to fully cover their energy efficiency upgrades. 

A low-income household is defined as being in the bottom 20 percent of their area’s median income.

By comparison, a moderate-income household – where they earn between 80 and 150 percent the median income – could be in line for as much as $19,000 in incentives on a $32,000 project.

In a higher-income home, owners could benefit from $4,000 in rebates and $3,200 in tax credits – saving them $7,200 on a home performance retrofit. 

Currently, homeowners who have a professional ‘home energy audit’ qualify for a $150 tax credit on a $500 audit. 

IRS guidance dictates that the audit must identify the biggest energy efficiency improvements including a specific estimate of the energy and cost savings to each improvement. 

What’s more, households can also claim a 30 percent tax credit on a heat pump – up to $2,000 in a single year. A heat pump can replace both an old air conditioning unit and a gas furnace as it can function as both.

Similarly, investing in insulation or more efficient windows and doors comes with a tax credit of 30 percent – to a cap of $1,200.

And motorists looking to upgrade their car to an electric vehicle can claim back up to $7,500 in tax credits depending on the model they opt for. 

If they add an electric car charging point to their home they can claim a further 30 percent discount – up to a maximum benefit of $1,000. 

The White House has been long been plugging eco-friendly home upgrades – but so far many of these products have remained far too expensive for the average consumer.

Dailymail.com revealed that the average cost of installing a solar panel system, for example, is around $20,000 – and it can take up to a decade to break even. 

Research by the Department of Energy and Lawrence Berkeley National Laboratory found that just 14 percent of households with residential solar in the US had annual incomes less than $50,000 in 2021. 

Similar accusations have been leveled at electric vehicles which cost on average $65,381 according to data from car dealership Edmunds.

This is almost $20,000 more than a standard gas car which is $47,892. While these vehicles are cheaper to run in the long-run, experts warned they can also take up to a decade to break even on the initial investment.

The Supreme Court has struck down President Biden’s student loan forgiveness plan.

The justices ruled 6-3 that the administration overstepped its authority with the program to wipe out more than $400 million in student debt. 

The program was challenged by six Republican states and two borrowers who argued Biden should have sought approval from Congress for a plan using substantial taxpayer funds. 

On June 30, Biden condemned the ruling as he promised to provide alternative support. ‘Today’s decision has closed one path. Now we’re going to start another,’ he told reporters.

But what will happen to the 16 million people already approved for forgiveness? 

What does the decision mean for you? 

For the 26 million people who applied for the program, more than half of whom were approved, the ruling will dash their hopes of taking advantage of having up to $20,000 cut from their debt. 

If no other plans are put in place before then, this means that borrowers will have to return to making full repayments in October when they resume after more than three years this fall.   

Estimates from the Congressional Budget Office said the plan would have cost taxpayers roughly $400 billion, which has now been saved – in welcome news to those who opposed the program.   

Some argued the forgiveness would be unfair to those who either paid their way through college, repaid their loans already, or never attended college in the first place due to the high cost of education.

What was the student loan forgiveness policy? 

The Biden Administration announced its student loan forgiveness program in August 2022. 

The plan intended to cancel up to $20,000 of debt for eligible borrowers – which could have wiped away an estimated $430 billion of the total $1.6 trillion in borrowed cash.

People who earn less than $125,000 a year, or $250,000 per household, could get up to $10,000 in debt cancelation. 

Students who received a Pell Grant – a needs-based federal grant for lower-income families – during their education, stood to receive up to $20,000 in forgiveness. 

Some 26 million people applied for the program, according to the Department of Education – more than half of the 46 million eligible borrowers. 

Of the applications, 16 million were provisionally approved to have their debt forgiven, but the program was paused in November before any funds had been given out. 

Why was the program paused?

The program was halted, and funds were blocked from being disbursed, because of two Supreme Court lawsuits arguing the Biden Administration overstepped its authority in approving the debt erasure.

Biden v. Nebraska was brought by Republican attorneys in six states – Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina – in September 2022, and argued that the program could harm tax revenues.

In October last year, the Job Creators Network Foundation filed a separate lawsuit in Texas on behalf of two student borrowers Myra Brown and Alexander Taylor.

The Biden Administration, however, argued the plan fell under the 2003 Higher Education Relief Opportunities for Students Act, otherwise known as the HEROES Act, which was created to ensure loan relief after the September 11, 2001 terrorist attacks.

The Supreme Court struck down the program in the case brought by Republican-controlled states. 

Although it ruled that the case brought by two student borrowers did not have the standing to challenge the program, this ruling was irrelevant given the outcome in the Biden v. Nebraska case. 

When will student loan repayments resume? 

The White House paused student loan repayments during the Covid-19 pandemic – in a separate policy to the student loan forgiveness program.

The Government argued the pandemic was a national emergency, which gave it the authority to cancel debt under the HEROES Act.    

But student loan payments are set to resume after more than three years this fall, after a deal was reached between the White House and Congress on raising the debt ceiling formally abolished the pause.

Interest will start accruing on September 1, according to the Department of Education, and borrowers will need to start making payments on federal student debt again in October.  

According to a new report from Wells Fargo, the average monthly payment will be between $210 and $314 once repayments resume. 

What support is Biden planning instead? 

On June 30, Biden vowed to work on a new program under the Higher Education Act to begin a new program to ease borrowers’s threat of a default if they fall behind on payments.

So far details on this support are scant.

Why you should NEVER book flights on a Friday – and always travel on a Wednesday: Experts reveal their top tips for bagging cheap airfares

• Expedia analyzed millions of flights to find the cheapest time to book
• Its findings show the best time to buy is a Sunday while Friday is worst
• It comes as travelers are warned to prepare for a ‘summer of hell’ 

By Helena Kelly Consumer Reporter For Dailymail.Com

Published: 13:05 EDT, 14 May 2023 | Updated: 13:13 EDT, 14 May 2023