Moody's, S&P May Downgrade U.S. Debt Rating
Moody's Investors Service and Standard & Poor's are both considering downgrading their ratings on U.S. debt because of rising interest-to-revenue ratios, the nation's jobless recovery and rising Social Security and health care costs, among other factors, The Wall Street Journal reported Thursday.
Moody's said that the U.S., along with Germany, France and the U.K., risks losing its "Aaa" rating if health care and pension subsidies aren't reined in. The agency recommended that the U.S. consider enacting changes recommended by President Obama's bipartisan National Commission on Fiscal Responsibility and Reform , such as Social Security reform, modification of the mortgage interest tax deduction and a gas tax, the Journal said.
Standard & Poor's also said Thursday that the U.S. AAA debt rating may be at risk of a downgrade because the jobless recovery from the recent recession threatens the domestic economy.
The federal deficit has been on the rise as government spending has outpaced revenue increases in recent months. While the deficit fell in December, for 2010 as a whole, it likely exceeded $1 trillion, according to the Treasury Department.