A couple notes about what's below: Ben Stein referred to the S&P alert a few weeks ago in the
New York Times when he called on his fellow Republicans to raise taxes on the rich.
Also, Republicans will probably use the S&P report as another trumped up justification to trash Social Security and Medicare. About that, realize in advance that the report implies that Republicans do just the opposite of what they have been trying with Social Security (costly private accounts with no adjustments to address long-term solvency) and Medicare (the very costly mangling of the Medicare prescription drug program that the Republican Congress and President put into place in 2003).
The report doesn't say that Democrats have the answer. But it does spell out why the fiscal incontinence of Republicans, the Republican mangling of medicare, and trends in demographics have us headed for disaster.
The Republicans in power have absolutely failed to address any of these issues, in fact they have made problems much worse.
http://www.savings-bond-advisor.com/us-credit-rating-could-drop-within-10-years/The press release from Standard & Poor's annoucing the US report says:
Without concerted policy and fiscal reforms, the aging U.S. population will lead to intense pressure on the public finances and the ratings on the sovereign, Standard & Poor's Ratings Services said in a report published today.
"Absent further reforms, total age related public expenditures in the U.S. will rise to 20% of GDP in 2050, up from 10% in 2005," said David Wyss, Standard & Poor's Chief Economist for the U.S. "In this scenario, general government deficits and net debt would rise sharply from the mid-2020s to reach 29% and 350% of GDP, respectively, by 2050."
A fiscal deterioration of that magnitude would not be compatible with the current 'AAA' long-term sovereign rating on the U.S. After 2015 it would fall into the 'A' category, and would then drop further into the 'BBB' category by 2020. In 2025, U.S. fiscal indicators would have weakened to an extent that they would be more typical of performances currently associated with speculative-grade sovereigns.
. . .
The scenario analysis therefore gives some valuable insights about the power of policy choices. If the U.S. were to embark on a radical structural reform preventing age-related spending from rising, fiscal indicators would hold up much better. Following such a concentrated policy approach, the U.S. net debt ratio would be only 40% of the ratio under the no-policy-change base-case. The theoretical sovereign rating would not fall below the 'BBB' category even by the middle of the current century.
"The U.S. position has worsened since 2003, because of the new drug benefit added to Medicare, which increases estimated health care costs by nearly 2% of GDP in 2050, and accounts for one-quarter of the rise in spending on the elderly," said Mr. Wyss. "Even without that new program, however, the U.S. fiscal position would slip to speculative-grade characteristics by 2030."