Say good bye to AAA rating

[Avinash_Tyagi]

Triple-A rating for U.S. in jeopardy
By Darla Mercado
January 11, 2008
The United States could lose its triple-A credit rating within the next ten years unless Medicare and Social Security are reformed, Moody’s said.

Although the country’s level of general government debt is lower than that of other AAA-rated nations, such as Canada, France and Germany, it continues to rise.

A 15.5% rise in Medicare benefits contributed to a 6.5% increase in government spending, and that is expected to continue growing as a part of a long-term trend, a Moody’s report found.

Although during the 2007 fiscal year, the U.S. deficit shrank to $248 billion, or 1.2% of the gross domestic product, due to growth in tax revenues, the Bush administration hasn’t done enough to aggressively trim deficits, the report by the credit ratings, research and risk analysis firm noted.

The problem will leave a huge mess for the new administration to clean up as the 2010 expiration date on tax cuts approaches.

Spending on the wars in Afghanistan and Iraq are also about to become more expensive, with defense costs rising to 10% this year.

In the last fiscal year, this spending made up 4.9% of the GDP.

Moody’s report also saw a growing risk of an outright recession.

 

http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20080111/REG/840428110

 

Been warning about this for a while, but everyone says, oh the economy is doing fine