Heading for disaster at breakneck speed
Moody’s says that a potential downgrade of US debt could occur as soon as three years from now:
The key data point in Moody’s view is the size of federal interest payments on the public debt as a percentage of tax revenue. For the U.S., debt service of 18%-20% of federal revenue is the outer limit of AAA-territory, Moody’s managing director Pierre Cailleteau confirmed in an e-mail.
Under the Obama budget, interest would top 18% of revenue in 2018 and 20% in 2020, CBO projects. But under more adverse scenarios than the CBO considered, including higher interest rates, Moody’s projects that debt service could hit 22.4% of revenue by 2013.
The administration’s numbers probably don’t include the budget busting effects of the healthcare legislation that the media have just begun to notice.
May 12th, 2010 at 9:58 am
Obama is fine with growing the huge debt, just don’t downgrade US before Barry’s 2012 campaign.
Of course the next hurdle is to spend enough stimulus to put a smiley face on unemployment for the 2010 election. Gee … only 10% … excellent (not counting those no longer looking).