• Heritage Action
  • More

Rating Uncle Sam

Recorded on July 20, 2011

From The Heritage Foundation, I'm Ernest Istook.

The federal government's loan rating is a lot like your credit score.

With a good score, lenders will grant you more favorable terms. If your credit score slips, you get charged higher interest and sometimes cannot get credit.

So when Moody's and also Standard and Poor's say they might downgrade Uncle Sam's rating, interest costs could rise by billions. Because other loans are often linked to Treasury bill rates, a federal downgrade ripples through the economy and interest rates go up for people and businesses all across America.

The rating services say just raising the federal debt limit is not enough. They demand a long-term plan to reduce spending and reduce the federal deficit. If not, they'll declare our government a higher risk.

The message to politicians is that borrowing more money won't fix the problem; we've got to quit spending so much—or else.

From The Heritage Foundation, I'm Ernest Istook.