(The Center Square) – When the U.S. lost its last AAA credit rating earlier this month, a nonprofit group that tracks government spending wasn’t surprised.
Truth in Accounting, which pushes for financial transparency across all levels of government, had already given the federal government its own grade: F.
The group uses a proprietary methodology that it says cuts through “politicization and accounting tricks” to give taxpayers a complete picture of government financial management.
According to the U.S. Department of Treasury, the nation’s debt stands at $36.2 trillion. Truth in Accounting, however, uses tougher standards. It pegs the nation’s true debt at $158.6 trillion, or about $974,000 for each federal taxpayer.
Most of the debt is from obligations, including $67.1 trillion in Medicare benefits and $51.6 trillion in Social Security benefits.
Sheila Weinberg, founder and CEO of Truth in Accounting, said Moody’s was late to the game.
“We always think those ratings are very generous,” she told The Center Square. “So obviously, we thought it was overdue.”
Moody’s downgraded the U.S. credit rating to AA1 earlier this month, projecting Congress won’t be able to reduce the nation’s growing debt. It was the last credit-rating agency to keep the U.S. at a top AAA rating. Fitch Ratings downgraded the U.S. in 2023, and S&P Global Ratings did so in 2011.
“Successive U.S. administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs,” Moody’s wrote in a statement. “We do not believe that material multi-year reductions in mandatory spending and deficits will result from current fiscal proposals under consideration. Over the next decade, we expect larger deficits as entitlement spending rises while government revenue remains broadly flat.”
Moody’s evaluates risk for bondholders. Weinberg said Truth in Accounting evaluates financial management for taxpayers. Weinberg noted that credit rating agencies often take into account a government’s ability to raise taxes because those taxes can be used to pay back bondholders.
Weinberg said the federal government’s “financial condition has been horrible for decades, and it is just getting worse and worse and worse.” Without changing major cost drivers such as Medicare and Social Security, Congress can do little to fix the debt situation, Weinberg said.
“If you’re not going to touch [Social Security and Medicare], then you’re just playing with the deck chairs on the Titanic,” she said.
Weinberg said the only good thing to come from Moody’s rating decision was that more people might pay attention to the federal debt problem.
GOP members of the U.S. Senate have already raised concerns about the debt levels in the House-approved budget. Congress has run a budget deficit every year since 2001, which contributes to the nation’s overall debt profile.
In January, the federal government reported net costs of $7.4 trillion in fiscal year 2024, but it couldn’t fully account for its spending. The U.S. Government Accountability Office, which is Congress’s research arm, said that the federal government must address “serious deficiencies” in federal financial management and correct course on its “unsustainable” long-term fiscal path.
