Moody’s Says U.S. Credit Rating At Risk
Moody’s, a credit rating agency, says the U.S. government’s triple-A credit rating is jeopardy due to soaring health care expenditures and Social Security. This shouldn’t be all that surprising. Think of a corporation whose expenditures are growing faster than its profits. Such a firm, generally, wont be around long. And that is precisely the problem with Medicare. It is growing at a clearly unsustainable rate, and as such the U.S. becomes more of a credit risk.
The US is at risk of losing its top-notch triple-A credit rating within a decade unless it takes radical action to curb soaring healthcare and social security spending, Moody’s, the credit rating agency, said on Thursday.
The warning over the future of the triple-A rating — granted to US government debt since it was first assessed in 1917 — reflects growing concerns over the country’s ability to retain its financial and economic supremacy. […]
But Moody’s warning comes at a time when US confidence in its economic prowess has been challenged by the rising threat of a recession, a weak dollar and the credit crunch. […]
Unlike Moody’s previous assessment of US government debt in 2005, Thursday’s report specifically links rises in healthcare and social security spending to the credit rating.
“The combination of the medical programmes and social security is the most important threat to the triple-A rating over the long term,” it said.
Steven Hess, Moody’s lead analyst for the US, told the Financial Times that in order to protect the country’s top rating, future administrations would have to rein in healthcare and social security costs.
But we have McCain telling us he is going to cut Medicare premiums. Every Democratic candidate wants to actually spend more money. In the case of Senator Clinton; she proposed to fund her spending, in part, by rolling back the Bush tax cuts. Sounds good at first until you realize that the Bush tax cuts will expire on January 1, 2011 and that all of Senator Clinton’s spending will actually add to the budget deficit and exacerbate the situation.