Paul announced earlier this week that he won't run for reelection to Congress. Paul: Credit rating not worth saving

The United States’s top credit rating is “probably not” worth saving, Rep. Ron Paul (R-Texas) said Thursday, less than a day after a major rating agency indicated it was considering a downgrade as the country hurtles toward the August 2 deadline without a deal to raise the debt ceiling.

Paul, who earlier this week announced that he won’t run for reelection to Congress so that he can focus on his campaign for the Republican presidential nomination, suggested in an interview on Bloomberg TV that he doesn’t see much value in the ratings of Moody’s and the two other major bond raters.


“I think if you had a market evaluation on this issue, it should have marked down a long time ago,” he said.

A downgraded credit rating would only amplify what is already clear to him - that the U.S. government is “insolvent,” Paul said.

“We play along with this game with Social Security. We know it is insolvent. We know that if it were an insurance company, it would be in big trouble,” he said. “It is true that this rating will have an effect, but it is a short-term effect. Ultimately, the fundamentals show this country is bankrupt.”

Though raising the debt ceiling would solve short-term problems, it leaves the longer term ones intact, Paul said.

“Sometimes I wonder whether this is more of a political theater to build up the fear. First, we won’t be able to write the checks for Social Security and the next thing there’ll be a down rating of bonds,” he said.

President Barack Obama said in an interview earlier this week that he could not “guarantee” that Social Security checks would be sent on August 3 and onward if there isn’t a deal on the debt “because there may simply not be the money in the coffers to do it.”

Though Paul, a longtime critic of U.S. monetary policy who would like to see the Federal Reserve abolished and wrote a book called “End the Fed” two years ago, is doubtful about the actual value of Moody’s rating of the U.S. government, he acknowledged it could motivate congressional Republicans and the president to reach a deal on the debt ceiling.

“If they do this, this will be very significant, but I think it is part of the game to make sure everyone is fearful so we continue this process,” he said, referring to the negotiations over raising the debt ceiling.

“Long term, I think raising the debt limit is a negative because it delays the inevitable. It will give us much bigger problems down the road. Today and tomorrow, if Moody’s does not lower the bond rating, it will be helpful in the short run. In the long run, it will be more devastating because Congress will go back to their old habits again.”