Biden officials blame GOP ‘extremism’ for Moody’s ‘negative’ credit outlook
The Biden Administration Disagrees with Moody’s Negative Credit Outlook for the United States
The Biden administration released statements Friday evening expressing their disagreement with Moody’s Investors Service changing the United States credit outlook to “negative.” Deputy Treasury Secretary Wally Adeyemo assured that President Joe Biden has proposals in place to cut the budget and reduce the national deficit as a response to this change. Moody’s justified their decision by pointing out the large fiscal deficits and the significant weakening of debt affordability.
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“While the statement by Moody’s maintains the United States’ Aaa rating, we disagree with the shift to a negative outlook. The American economy remains strong, and Treasury securities are the world’s preeminent safe and liquid asset,” Adeyemo said in a statement. “The Biden Administration has demonstrated its commitment to fiscal sustainability, including through the more than $1 trillion in deficit reduction included in the June debt limit deal as well as President Biden’s budget proposals that would reduce the deficit by nearly $2.5 trillion over the next decade.”
White House press secretary Karine Jean-Pierre echoed Moody’s comment, stating that “continued political polarization” was another factor contributing to the change in outlook.
“Moody’s decision to change the U.S. outlook is yet another consequence of Congressional Republican extremism and dysfunction,” Jean-Pierre said. “Moody’s cites a number of recent actions by Congressional Republicans: repeatedly taking us to the brink of a government shutdown, shutting down Congress for three chaotic weeks because they were unable to unify around a leader, and holding the nation’s full faith and credit hostage. Whether it’s those actions or their continued attempts to increase the debt with tax giveaways for the wealthy and big corporations, extreme Congressional Republicans have undermined our economy at every turn.”
Moody’s maintained the same AAA rating for the U.S. despite the change in outlook. This AAA rating signifies the lowest expectation of defaulting on debt. According to Moody’s, the nation possesses “exceptional economic strength, high institutional and governance strength, and the unique and central roles of the US dollar and Treasury bond market in the global financial system.”
The last time Moody’s lowered the outlook to “negative” was in 2011, and it remained so until 2013 when it reverted back to “stable.”
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July 9, 2021
The Biden Administration Disagrees with Moody’s Negative Credit Outlook for the United States
The Biden administration released statements Friday evening expressing their disagreement with Moody’s Investors Service changing the United States credit outlook to “negative.” Deputy Treasury Secretary Wally Adeyemo assured that President Joe Biden has proposals in place to cut the budget and reduce the national deficit as a response to this change. Moody’s justified their decision by pointing out the large fiscal deficits and the significant weakening of debt affordability.
The United States has long held the prestigious Aaa credit rating from Moody’s, indicating its ability to meet financial obligations with minimal credit risk. However, Moody’s recently modified the country’s credit outlook from “stable” to “negative,” citing concerns over fiscal deficits and debt affordability. While Moody’s decision does not affect the actual credit rating at this time, it serves as a warning sign for potential future risks.
In response to Moody’s negative credit outlook, the Biden administration expressed disagreement with the assessment. Deputy Treasury Secretary Wally Adeyemo emphasized that President Biden has proposed measures to address the budget deficit and reduce the national debt. These proposals aim to ensure financial stability and strengthen the country’s creditworthiness.
President Biden’s economic agenda includes plans to invest in infrastructure, education, and climate initiatives, while also seeking to raise taxes on corporations and wealthy individuals. The administration believes that these measures will not only stimulate economic growth but also address the fiscal challenges raised by Moody’s. By implementing these policies, the Biden administration seeks to reduce the national deficit and debt over time.
Furthermore, the Biden administration highlights that the current economic environment, characterized by low interest rates and strong demand for US Treasury bonds, provides favorable conditions for managing the national debt. They argue that such conditions make debt service manageable and ensure the continued stability of the US economy.
Moody’s decision to revise the credit outlook has raised concerns among Democrats, who fear its potential impact on President Biden’s political standing in the coming years. Some Democrats worry that a negative credit outlook may diminish confidence in the administration’s economic policies and jeopardize the President’s chances for re-election in 2024.
On the other hand, Republicans have seized on Moody’s decision as evidence of the Biden administration’s fiscal irresponsibility. They argue that the large fiscal deficits incurred by the administration’s proposed spending plans pose a long-term threat to the country’s financial stability.
The disagreement between the Biden administration and Moody’s underscores the ongoing debate over fiscal policy and economic priorities. While the administration asserts that its proposals will effectively address the fiscal challenges, Moody’s concerns reflect the risks associated with growing debt levels and potential strains on debt affordability.
As the United States embarks on a path of economic recovery and growth following the COVID-19 pandemic, the Biden administration faces the important task of balancing economic stimulus with fiscal responsibility. The outcome will not only shape the country’s credit outlook but also determine its long-term economic trajectory.
In conclusion, the Biden administration disagrees with Moody’s negative credit outlook for the United States. They assert that President Biden’s proposed measures to cut the budget and reduce the national deficit will ensure financial stability and strengthen the country’s creditworthiness. However, Moody’s concerns over fiscal deficits and debt affordability raise valid points regarding the need for responsible economic policies and sustainable debt management. The clash between the administration and Moody’s highlights the ongoing debate over fiscal policy and economic priorities, which will shape the United States’ economic future.
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