Md. Governor Reacts To Debt Crisis

ANNAPOLIS, Md. (WJZ) — Maryland’s economy is closely tied to the federal government.  With billions of federal dollars spent here each year, cuts in federal spending are cause for concern. 

Political reporter Pat Warren has reaction from the governor.

Maryland isn’t likely to feel it yet, but the extended outlook is not good.

Tidal wave or ripple effect?  The impact of the US credit downgrade will be felt in Maryland…but to what degree and for how long?

“What Marylanders need to know about our bond rating is that we have a AAA bond rating,” said Governor Martin O’Malley.

What Maryland also has is an economy tied more closely to the federal government than other states, which means ratings agencies could put it on a credit watch.  Maryland has held a AAA rating for years, but it also depends on federal spending.  In fiscal year 2009, for example, 52.4 billion federal dollars were spent here.  An analysis from Trend Advisors shows that a 22 percent cut in spending here would equal a loss of 150,000 jobs.

Governor O’Malley is aware of the stakes.

“We’ve made the tough decisions time and again.  None of them individually have been popular, whether they were cuts or whether they were things like the penny in the sales tax, but we made the tough decisions so we can pay our bills and maintain a AAA bond rating,” he said.

Morris Segall, president of Trend Advisors, says it could be tough for the state to hold that line.

“We’re running a structural deficit of a billion dollars even before this, so to the extent that we had our own difficulties without this, I think those difficulties became a lot more magnified with this,” Segall said.

This is uncharted territory.  One thing we as consumers might notice is higher prices on imported goods since the value of the dollar is down.  Interest rates are not expected to spike but they could be creeping up.

Maryland achieved its rating 10 days ago and doesn’t go back into the bond market until February.

More from Pat Warren
  • Credit Downgrade Could Have Devastating Impact on MD Economy « SPG Trend Advisors Blog

    […] With the U.S. credit downgrade, Wall Street is already in a tailspin and cuts in federal spending appear to be on the horizon. This potentially could have a devastating impact on Maryland’s economy, which has always been closely tied to the federal government. In an interview with WJZ-TV 13, Morris Segall, President of SPG Trend Advisors, says it could be tough for Maryland to continue to hold the line and continue to maintain its AAA bond rating. View the interview at: […]

  • Wheres common sense when you need it

    I posted a comment but it doesn’t show up. Way to go, nothing like getting the peoples voice out there for the world to read!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

    • Get With the Program

      This site uses a filter that blocks a percentage of comments. It is programmed to look for posts in “All Caps” since those folks rarely address the topic at hand, and are focused upon themselves.

  • Julia

    Yeah,O’Malley and giving money to illegals instead of helping out legal citizens of your own state is probably one of the things you should “Cut back on”

    • Dave

      Amen. He actually took away State Grants promised to Maryland students as soon as that terrible in state tuition bill passed. Maybe he should spend more time Governing and less time playing in a band. On second thought when he is busy playing in the band he isn’t signing bad legislation into law. Rock on Gov!

  • JackDaniels


  • TaxAndSpendYourMoney

    Tax O’Malley needs to be quiet and talk about things he knows about. Like Fee-Keeping… buzz off governor moron.

  • Bottom Line

    Since MD has been maintaining a debt of 1 Billion $, our budget is being handled as wrecklessly as the federal government. One of the primary duties of a leader is to manage tax revenue effectively; to maintain a balanced budget. Since this clearly is not the case, I would suggest that we disregard any precursery comments from O”Malley that are intended to soften the blow. The bottom line is that we are in bed with the federal government, and will respond in a similar fashion, regarding cut-backs. I do expect additional tax hikes and increased fees across MD, as O”Malley is a creature of habit, just like many other theives.

  • O-Faily

    MD Governor reacts to debt crisis, “Derrrrrrr…….”

  • State Roundup, August 9, 2011 | Maryland News & Things to Do Blog

    […] Warren of WJZ-TV interviews Gov. Martin O’Malley concerning the extended forecast for Maryland’s ability to retain its Triple A bond […]

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