K-12 Tax & Spending Climate:

Chris Giles & David Oakley:

Moody's Investor Service, the credit rating agency, will fire a warning shot at the US on Monday, saying that unless the country gets public finances into better shape than the Obama administration projects there would be "downward pressure" on its triple A credit rating.

Examining the administration's outlook for the federal budget deficit, the agency said: "If such a trajectory were to materialise, there would at some point be downward pressure on the triple A rating of the federal government."

It projects that the federal borrowing is so high that the interest payments on government debt will grow to more than 15 per cent of government revenues, about the same by the end of the decade as the previous 1980s peak.

This time the servicing burden would be harder to reverse, however, because it would not be caused by high interest rates but by high debt levels.

Posted by Jim Zellmer at March 16, 2010 2:13 AM
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