The Safe Commission Act: a Bipartisan Way Forward

THE SAFE COMMISSION ACT: A BIPARTISAN WAY FORWARD -- (House of Representatives - March 06, 2008)

(Mr. WOLF asked and was given permission to address the House for 1 minute and to revise and extend his remarks.)

Mr. WOLF. Mr. Speaker, in January, Moody's Investors Service released its annual report which concluded that the United States triple-A bond rating is at risk.

We should care that respectable credit rating agencies are projecting that the United States will be on par with Estonia by the year 2015, Poland and Mexico by 2020, and below investment grade, junk debt, by 2025.

Our Nation cannot continue on its current financial path. The Cooper-Wolf SAFE Commission Act would put everything on the table, tax policy, entitlements, and other Federal programs, to provide a bipartisan way forward on this issue. Over 70 Members from both sides of the aisle, Republican and Democrat, are already cosponsoring the bill.

We must work together to rein in spending. We cannot continue to avoid a responsibility to future generations, to our children and our grandchildren, by passing on a broken system in the form of unfunded Social Security and Medicare obligations and unsustainable spending.
[From the Financial Times, Jan. 11, 2008]

U.S.'s Triple-A Credit Rating `Under Threat'
(By Francesco Guerrera, Aline van Duyn and Daniel Pimlott)

The U.S. is at risk of losing its top-notch triple-A credit rating within a decade unless it takes radical action to curb soaring healthcare and social security spending, Moody's, the credit rating agency, said yesterday.

The warning over the future of the triple-A rating--granted to U.S. Government debt since it was first assessed in 1917--reflects growing concerns over the country's ability to retain its financial and economic supremacy.

It could also put further pressure on candidates from both the Republican and Democratic parties to sharpen their focus on healthcare and pensions in the run-up to November's presidential election.

Most analysts expect future administrations to deal with the costs of healthcare and social security and there is no reflection of any long-term concern about the U.S.'s financial health in the value of its debt.

But Moody's warning comes at a time when U.S. confidence in its economic prowess has been challenged by the rising threat of a recession, a weak dollar and the credit crunch.

In its annual report on the U.S., Moody's signalled increased concern that rapid rises in Medicare and Medicaid--the government-funded healthcare programmes for the old and the poor--would ``cause major fiscal pressures'' in years to come.

Unlike Moody's previous assessment of US government debt in 2005, yesterday's report specifically links rises in healthcare and social security spending to the credit rating.

``The combination of the medical programmes and social security is the most important threat to the triple-A rating over the long term,'' it said.

Steven Hess, Moody's lead analyst for the U.S., told the Financial Times that in order to protect the country's top rating, future administrations would have to rein in healthcare and social security costs.

``If no policy changes are made, in 10 years from now we would have to look very seriously at whether the U.S. is still a triple-A credit,'' he said.

Mr. Hess said any downgrade in the U.S. rating would have serious consequences for the global economy. ``The U.S. rating is the anchor of the world's financial system. If you have a downgrade, you have a problem,'' he said.

Moody's did once threaten to cut the rating of some of the U.S. Treasury's debt when Congress refused to pass the president's budget in the mid-1990s. Other large economies, notably Japan in the 1990s, have had to suffer the symbolic blow of losing their top-notch credit rating.

Last year, David Walker, comptroller general of the U.S., caused controversy when he compared America's current situation with the dying days of the Roman empire and warned the country was on ``a burning platform'' of unsustainable policies.

Medicare and Medicaid spending, which has risen sharply over the past few decades and now accounts for about 45 per cent of total federal spending, up from about 25 per cent in 1975, has long been a source of concern.

Last month, Peter Orszag, director of the Congressional Budget Office, which advises Congress on the federal budget, said the issue was ``the central fiscal challenge'' facing the US.

Most presidential candidates have vowed to reform the healthcare system but many of them, especially on the Democratic side, have focused on extending coverage to the 40m-plus uninsured Americans rather than on cutting costs.

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