The Biden administration released statements Friday evening disagreeing with Moody’s Investors Service changing the United States credit outlook to “negative.”
Deputy Treasury Secretary Wally Adeyemo promised that President Joe Biden has proposals to cut the budget and reduce the national deficit as a result. Moody’s claimed to have changed the outlook from “stable” to “negative” because fiscal deficits remained large, which is causing debt affordability to weaken significantly.
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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 a comment from Moody’s when it claimed “continued political polarization” was another reason for the change.
“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.”
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Moody’s maintained the same AAA rating for the U.S. as before the change. This AAA rating awarded by Moody’s implies that the U.S. has the lowest expectation of defaulting on debt. According to Moody’s, the nation maintains “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, where it remained until 2013, when it reverted to “stable.”
