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U.S. Debt Default Could Threaten Israel Bonds

And Rep. Cantor is a crucial player in the negotiations

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Rep. Eric Cantor Tuesday. Speaker John Boehner is in the background.(Mark Wilson/Getty Images)

Should the U.S. government fail to increase the debt ceiling by the August 2 deadline, the consequences could include the downgrading not only of U.S. Treasury bonds but also of other bonds guaranteed by the United States, including those issued by Israel and Egypt. Moody’s, one of the three main credit raters, has announced that it may downgrade U.S. bonds from the current pristine AAA rating, and “[b]onds issued by the governments of Israel and Egypt that are guaranteed by the U.S. government were also placed on review for possible downgrade.” (Moody’s and the other credit raters famously rated investment instruments composed mainly of sub-prime mortgages as AAA, but our country is dysfunctional, so never mind.)

One aspect to this that may be especially interesting to Tablet Magazine readers is that Rep. Eric Cantor, Republican of Virginia, House Majority Leader, and the highest-ranking Jewish American legislator ever—and the subject of a superb profile by Allison Hoffman—has been playing a crucial role in the debt-ceiling talks. He emerged as the voice of the House Republican rank-and-file earlier this month, refusing even the possibility of tax increases as President Obama and Speaker Boehner negotiated a combination of spending cuts and revenue increases—the latter being a combination of tax hikes and the closing of tax loopholes—in an effort to decrease the debt and avoid a possible default. (For this, some have accused Cantor of being outrageously irresponsible and nihilistic, given how important raising the debt-ceiling is and the fact that Obama and Boehner had neared compromise, but Rabbi Shmuley Boteach explains that in fact Cantor is a “people person.”) A current compromise by the so-called “Gang of Six” senators would lower the debt by $3.7 trillion. Details are still hazy, but suffice to say that if whatever final deal is done has a proportion of spending cuts and revenue increases as low as three-to-one, then that would be a huge and unlikely win for the Democrats, because the Republicans are insane irresponsible zealots you should really read this essay and then run for your lives ours is an inherently conservative nation.

Moody’s: Israel Bonds Will Be Affected By U.S. Review [JTA]
Related: The Gentleman From Virginia [Tablet Magazine]
Cantor Ascends As GOP Voice [Politico]
Push Intensifies for Larger Deal on Debt Impasse [NYT]
Empty Wallets [The New Yorker]
The Demonization of Eric Cantor [Huff Post]

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Mark S. Devenow Esq. says:

I don’t know whether this was offered up tongue in cheek or was intended to be serious but either way this fetish Tablet reflects for trashing conservatives, especially Jewish conservatives, is disgusting. Eric Cantor, for the record, has exactly nothing to do with Obama’s exploding of US debt on social engineering pipe dreams cum mass entitlement programs which dispossess the productive sector of society in favor of a “recipient class” which Obama and his Democrat Party cohort seeks to enlarge to the point of being a reliable electoral majority. Of such schemes prosperous and free societies have fallen before. But this does not – cannot – matter to Democrat elitists who think they know better and that history is irrelevant. Marc Tracy fits the mold of this mindset rather nicely. That Tablet descends to featuring this idiot’s work is telling. Jews in particular are more victimized/disadvantaged by these social engineering schemes than any other group (with the possible exception of Blacks who are made hostage thereby to inefficient paternalistic redistribution in lieu of being provided educational and real economic opportunities by which the conditions and culture of cross-generational poverty might be escaped). So it becomes anomolous for a putatively Jewish publication to be giving voice to this nonsense. Shame on Tablet for allowing Marc Tracy such space and prominence.

Michael Lustig says:

With all deference to the JTA (which sourced the orginal article, basing it on a Moodys press release), Israel no longer issues US-guaranteed bonds, and hasn’t done so in many years (the last slug was in 2004) and they represent a fraction of the country’s overall outstanding debt. While there is a risk of a downgrade on that particular paper, it wouldn’t affect Israel’s ability to function in the capital markets to any degree, and for that matter would barely affect the actual credit quality of the bonds themselves as they are a direct obligation of the government of Israel, and are merely guaranteed (as a second line of defense) by the US government.

The potential US bond default is a looming/serious issue on many levels, but Israel bonds are in a different realm and at worst would be affected on a tertiary basis.

All the left-leaning, misinformed, but well-intentioned Jews who put Obama in the White House and continue to favor him in polls and to shovel money his way, no matter how much he harms Israel and disrespects US law, should look in the mirror. They have aided and abetted this man and have caused this crisis. The man does not go to the bathroom without first taking a poll. If everyone stands up for the right thing, the man will flip-flow on this issue as he has on all others, and become an advocate for doing the right thing. His only purpose in life is to get re-elected. If you value Israel and value America, do not aid an abet his wrong-doing.

sharon says:

Obama is a prince when you compare him to Bush, Cheney, Cantor. Buchanan, Palin, BACHMANN, McConnell, Boehner and the evangelical right wingers. They are bringing down this country by their bigotry, their hatred of women, their hatred of science and their lack of rational thought and behavior. What I hold against Obama is that he didn’t have the guts in summer of 2009 to crush the fat old teabaggers who didn’t want the government to touch THEIR medicare. Instead he allowed the corrupt Kochs and the corrupt Murdoch to turn them into a party with their billions. And now we watch the idiots destroy our economy and our country.

Lansing Reed says:

Sharon – very nice. Have you considered yoga or deep breathing exercises to deal with these irrational fits of anger? And by the way, how, exactly, would you have your king Obama “crush the fat, old, teabaggers”? Many of us who support the tea parties are neither fat nor old and we are the people who pay the taxes that keeps government going, that serve in the military, and that work as your public safety professionals. So, what’s your plan? Or is it just that you think anyone who disagrees with you is a bigot, hates women, hates science, hates rational thought and behavior, and is a pervert?

G Shapiro says:

Thanks for the reality check, Sharon!

Mark and David, where did you get the idea that Obama created this exploding deficit? Try two wars, massive tax cuts for the wealthy and deregulation, voted for by Cantor, et. al., and it all happened under G.W. I’ll admit that Obama has not stood up enough to these right wing nut bars, but he is not the one who created the clusterf*** that is the US economy.

And what’s with the never-ending bashing of liberal Jews? There are thousands of liberal Jews who love and support Israel – but if we don’t agree with everything the Israeli government does, we’re called self-hating Jews and anti-semitic. This hateful discourse doesn’t do anyone any good, and it sure doesn’t help Israel.

I

Cantor is all about power-grabbing. He wants Boehner’s job and kneecapping him is how he’ll get it.

G. Shapiro seems to miss facts: Obama’s budget deficits, Tarp, bailouts, etc, are larger than that of past President, and are what have resulted in the increased debt.

As for wars, Obama has increased the costs of the war in Afghanistan enormously, (as well as the economic aid which fuels corruption and disappears into politicians pockets), and added the new burdens in Libya.

Liberals may claim to love Israel, but when they support those like Obama who will put Israel at risk and increase the power of the enemies of Israel wordlwide, then there are important questions to raise.

Bill Pearlman says:

Obama exploded the deficit, that is the fact.

Rocky says:

If the Republicans push the country over the financial cliff, it will be very bad for American Jews and very bad for Israel. It would certainly embolden the Arab states to consider another Mideast war. In the early 1930’s, Germany’s old line political parties became dysfunctional and were not able to form a stable coalition government. Even two national elections for the Reichstag in 1932 did not solve the problem. In the end, President Von Hindenburg asked Adolf Hitler to form a government in January 1933, as the Nazi Party had actually won the largest number of votes in each of the 1932 elections. You know the rest. When the system breaks down, anything is possible.

In a financially unstable America, Jews have the most to lose, as they are the wealthiest demographic group on a per capita basis. It is only a few minutes subway ride from the public housing projects of Harlem and Brooklyn to the fancy co-ops of the Upper East Side. Do the hedge fund traders at 747 Park Avenue want to tell the public housing residents that their public assistance is being slashed?

If I were an unemployed Haredi studying at a Yeshiva in Israel, I would be looking for a job. Uncle Sugar is broke.

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U.S. Debt Default Could Threaten Israel Bonds

And Rep. Cantor is a crucial player in the negotiations

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