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 yesterday.(via Instapundit)
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.
It could also put further pressure on candidates from both the Republican and Democratic parties to sharpen their focus on healthcare and pensions in the run-up to November's presidential election.
Most analysts expect future administrations to deal with the costs of healthcare and social security and there is no reflection of any long-term concern about the US's financial health in the value of its debt.
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.
In its annual report on the US, Moody's signalled increased concern that rapid rises in Medicare and Medicaid - the government-funded healthcare programmes for the old and the poor - would "cause major fiscal pressures" in years to come.
Unlike Moody's previous assessment of US government debt in 2005, yesterday'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.
Saturday, January 12, 2008
Here's a Novel Idea: Reduce Benefits
Contrary to the confident promises of candidates, "fixing" healthcare and/or social security won't be free, as the Financial Times reports: