The U.S. received two stern warnings Thursday that it needs to get its
fiscal house in order, and quickly. Moody's, the credit rating agency, cautioned that it may need to downgrade its AAA-rating of U.S. debt sooner than expected, while the International Monetary Fund argued
that America must tackle its mounting debt and
confront thorny issues like entitlements if it wants to maintain its
credibility in global markets. Moody's AAA rating is its top
designation, but the agency pointed out that the U.S. has the highest
ratio of government debt to government revenue of any AAA-rated country.
The rebukes came a day after a congressional projection placed
this year's federal budget deficit at a post-World War II record of
$1.5 trillion. It also came on the same day that another credit-rating agency,
Standard & Poor's, downgraded Japan's bond rating from AA to AA-
out of concern that the country isn't making a credible effort to control its spiraling debt.
During his State of the Union address, President Obama proposed
deficit-reduction measures like freezing domestic spending, but critics accused him of skirting the painful spending cuts or tax increases needed to truly rein in the national debt.