Fitch has downgraded the rating of U.S. Treasury debt from AAA to AA+. The White House and others are up in arms, but the downgrade is justified, and S&P and Moody’s may ultimately do the same.
The truth is that every major federal fiscal and monetary agency has said for years that the country is on an imprudent and unsustainable fiscal path and nothing significant has been done to address it. The numbers speak loudly. Since Fiscal 2000 the debt subject to the debt ceiling has risen from about $5.7 trillion to about $32.5 trillion today. Total federal liabilities and unfunded social insurance obligations have risen from about $20 trillion in Fiscal 2000 to about $125 trillion today. Total public debt/GDP has risen from about 55% to about 120% today, and the Congressional Budget Office (CBO) projects that it will rise to about 181% of GDP by 2053 and rising under current law. In addition, our fastest growing federal expense is interest on the debt for which we get nothing! Credit rating downgrades will only make a bad situation worse.
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