The United States doesn't deserve its AAA credit rating and is a "fiscal doomsday machine" because the debt that the country carries is so high, says David Stockman, former federal budget director under President Reagan.
"The problem is not the ceiling, but the debt," Stockman tells CNBC. "It's the $6 billion a day that we're borrowing day in day out," he said.
"The system is totally broken. There is a complete stalemate," Stockman adds, pointing out that ratings agencies "ought to get it over with, cut the rating and begin to create some reality both in terms of the financial markets and the American public."
The government has asked Congress to raise its $14.3 trillion debt ceiling or else it will default on its obligations by Aug. 2.
Lawmakers are at odds over terms attached to raising that ceiling, with Republicans saying no tax hikes and Democrats saying the government needs the added revenue.
Standard and Poor's, a ratings agency paying close attention to the debate, says lawmakers should shoot for a plan that cuts deficits that generates $4 trillion in long-term savings.
That figure "takes you pretty far along, and I think a grand bargain of that nature would signal the seriousness of policymakers to address the fiscal position of the United States," says John Chambers, chairman of Standard and Poor's sovereign ratings committee, according to Reuters.
"Four trillion dollars would be a good down payment."
Prolonged debates over the ceiling, especially this close to the deadline, are inflicting further damage to U.S. credibility.
"The United States benefits from strong checks and balances, and strong institutions for 200 years, but the debate around the debt ceiling I think has been detrimental because this has been self-inflicted," Chambers says.
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