“Full faith and credit” expires in 2026

Scrivener links to a study on Tax Analysts about the current state of debt in America and how the crush of entitlements will change the ratings of U.S. government bonds in the future. The bottom line is that, while the national debt is high in dollar amounts, it’s relatively low historically and compared to other industrialized nations as a percentage of GDP. But the effect of entitlement spending will send treasury bills – once considered the safest of all investments – into a tailspin:

Standard and Poor's has projected the future credit rating of the U.S. government -- specifically, of U.S. government bonds, currently considered the "risk free" investment -- on the basis of current law and standard economic projections:

Year – rating
Until 2016: AAA
2017: AA+
2019: AA
2020: AA-
2022: A+
2023: A
2025: BBB+
2026 and later: Speculative (i.e. "junk")

One of the greatest strengths of the United States has been our ability to borrow in times of war or economic hardship. When the wave of Baby Boomers start collecting checks there will be no political escape route to a problem that has no fiscal sensibility. Delay on entitlement reform is not an option; otherwise, it’s going to be a hard ten-year drop into junk-bond status and fiscal turmoil.