Treasury Secretary Scott Bessent downplayed the impact of Moody’s downgrading the U.S. government’s credit rating in an interview on Sunday.
Moody’s Ratings on Friday downgraded the U.S. credit rating by one notch, from the highest tier Aaa to Aa1, citing concerns over the rising national debt and widening budget deficits.
Bessent was asked about the downgrade in an appearance on NBC News’ “Meet the Press” and said the downgrade was mainly in response to the fiscal conditions the Trump administration inherited.
“First of all, I think that Moody’s is a lagging indicator, and I think that’s what everyone thinks of credit agencies,” Bessent said. “Larry Summers and I don’t agree on everything, but he’s said that when they downgraded the U.S. in 2011. So it’s a lagging indicator.”
MOODY’S DOWNGRADES US CREDIT RATING OVER RISING DEBT
“And just like Sean Duffy said with our air traffic control system, we didn’t get here in the past 100 days,” he added.
“It’s the Biden administration and the spending that we have seen over the past four years,” the treasury secretary continued. “We inherited 6.7% deficit to GDP, the highest when we weren’t in a recession, not in a war. And we are determined to bring the spending down and grow the economy.”
CBO SAYS US BUDGET DEFICITS TO WIDEN, NATIONAL DEBT TO SURGE TO 156% OF GDP
White House press secretary Karoline Leavitt was asked about the downgrade during a Monday press conference by FOX Business Network’s Edward Lawrence, and she pointed to recent investment announcements as a sign of economic confidence in the U.S., as well as emphasizing President Donald Trump’s disagreement with the move.
“When you look at the world, the world has confidence in the United States of America and our economy. Once again, the president just last week secured trillions of dollars in investments flowing into our economy since the president took office,” Leavitt said.
WH ANNOUNCES $1.2T IN ECONOMIC COMMITMENT WITH QATAR, INCLUDING SIGNIFICANT BOEING ORDER
“That is because… people around the world have confidence in the United States of America. And if you also just look at the raw economic data that we’re seeing last week when we were out of town, inflation dropped once again, oil prices are dropping, gas prices are dropping. The president has added nearly half a million jobs to the American economy already,” she said. “So there’s a lot of optimism in this economy, and the president disagrees with that assessment.”
In its announcement on Friday, Moody’s said the downgrade “reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns.”
“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,” the firm explained. “We do not believe that material multi-year reductions in mandatory spending and deficits will result from current fiscal proposals under consideration.”
Moody’s added that it sees the federal government’s fiscal outlook worsening in the years ahead, with spending on entitlement programs like Medicare and Social Security continuing to rise amid the aging of the U.S. population and interest payments on the debt rising due to higher interest rates and widening deficits.
Read the full article here
