US Could Lose Its AAA Rating, Says Former Comptroller General
Joe Weisenthal|May. 13, 2009, 6:41 AM
Even though the tax and revenue fundamentals of the US are awful, it’s presumed that the US can hang onto its AAA rating for awhile. For one thing, we have a great track record (which helps a bit), we have a pretty solid political system, a largely free market economy and the ultimate fallback, the ability to print up our own currency. That’s a real benefit.
But as we put more and more debt from both the private sector and the states onto the Federal balance sheet, that’s bound to add some pressure.
In an FT Op-Ed, David Walker, the former Comptroller General of the US, lays out the scenarios by which the US could lose its AAA rating.
Obviously, our rampant spending and debt guarantees are an issue, but this is the part that we found particularly insightful:
…failure by the federal government to create a process that would enable tough spending, tax and budget control choices to be made after we turn the corner on the economy would send a signal that our political system is not up to the task of addressing the large, known and growing structural imbalances confronting us.
