Daijiworld Media Network – Washington
Washington, May 18: US treasury secretary Scott Bessent has dismissed the recent credit rating downgrade by Moody’s, calling it a “lagging indicator” and attributing it to the fiscal policies of the Biden administration.
On Sunday, Bessent reacted to the loss of the US’s final triple-A credit rating, saying, “We didn’t get here in the past 100 days.” He blamed the “6.7 per cent deficit-to-GDP” inherited by the current administration the highest recorded outside of wartime or recession on what he described as excessive government spending under Biden over the past four years.
However, Moody’s rationale for the downgrade was broader. In its statement on Friday, the agency cited a sustained rise in federal debt across multiple administrations, projecting that deficits could soar to 9 per cent of GDP by 2035 due to rising interest payments, entitlement costs, and lagging revenues.
Bessent, defending the Trump administration’s economic vision, reaffirmed the commitment to fiscal responsibility and economic growth, saying, “We are determined to bring the spending down and grow the economy.” He stressed that growth would outpace debt accumulation under current policies.
Moody’s was the last major ratings agency to uphold the US's triple-A rating. S&P downgraded the US in 2011, and Fitch followed in 2023, citing similar concerns over mounting national debt and political gridlock.
Adding to the economic uncertainty, President Donald Trump’s proposal to extend his 2017 tax cuts, estimated to cost nearly $5 trillion, failed to clear a key vote in Congress. Surprisingly, Republican fiscal conservatives blocked the move, expressing concerns over further inflating the deficit.
Reacting to the downgrade, Republican Congressman French Hill, chair of the House Financial Services Committee, issued a stark warning: “This is a clear signal of the nation’s growing financial instability.”
As both parties trade blame, the downgrade serves as a wake-up call for Washington, underscoring the urgent need to address the nation’s spiraling debt and fiscal imbalances.