With the US Government spending money during this pandemic like there truly is no tomorrow, can the government run out of money? One could say, "No", but there is that possibility. It depends on the credit rating of the US Government. In essence, the US Government does have a credit score. How could the credit rating of the US Government impact your personal finances? There are many ways it impacts all of us.
Is the credit score of the U.S. Government 800, or 760? The government has a lot of assets including all the taxpayers. So it should be high, shouldn't it? The overall federal deficit is over 27 trillion dollars which is a very high number. So maybe a credit score of 700 or 680 would be a better number. The US Government spent over 6 trillion dollars in 2020 while revenues during that same time coming in barely over 3 trillion, leaving a deficit of another 3 trillion dollars. Borrowing twice as much as one brings in is rarely a good sign. So maybe a credit score of 620 or 600 would be more appropriate.
There are concerns with the future of social security, medicare, student loan debt, medicaid, health coverage, current ongoing budget items and a myriad of other issues. Besides, we are teaching a new generation of Americans that you can go into debt and not have to worry about paying it. Someone else will pay it for you. Right?
Can something happen? Do we need to worry about deficits with the federal government? Nothing has happened so far - right? What does it matter as long as nothing has happened and it doesn't impact you!
The US Government does have a credit score - we can give you a range in our first segment next week of where it stands by the criteria all consumers are judged by. How does that credit rating impact you as a consumer. We will look at it.
There is a lot to consider. In the coming weeks, we will take go over these topics and identify how each issue can impact you. We will zero in on a true credit score of the US government by the same parameters credit scores measure us.
By understanding the financial issues at hand for the U.S. government, we can then better understand the future challenges and risks. If we can look at past crisis, they can help us identify what potentially could happen and how best to takes steps protect ourselves financially.