From Jim Geraghty:
On restoring America’s AAA credit rating, and how long that would take:
“I believe that if we show we have tackled our long-term unfunded liabilities, which are primarily Social Security and Medicare, and if we have killed certain federal programs, and if we’re on track to have a balanced budget in about eight years or so, at that point rating agencies will recognize that our credit rating is solid.
“ . . . Right now, the challenge from having been downgraded is not as apparent [as it might be] to the American people because the world is frightened of the euro, and so people are bringing their cash to the United States. That is holding down interest rates here. In addition, the Federal Reserve is purchasing our treasuries and holding down interest rates here. But at some point these features will come to an end, and if we are not on track to having a superior credit rating, we will start paying the costs of higher interest.”