The U.S. credit rating was given a negative outlook by Moody’s Investor Service in part due to the ballooning U.S. debt.
Moody’s, a global credit rating provider, made the projection on Friday, changing its assessment of the American credit from stable to negative. The news comes as spending and inflation have remained high throughout the Biden administration.
“In the context of higher interest rates, without effective fiscal policy measures to reduce government spending or increase revenues,” Moody’s said in a statement. “Moody’s expects that the U.S.’ fiscal deficits will remain very large, significantly weakening debt affordability.”
The rating’s agency also said the decision was based in part on political polarization.
“Continued political polarization within U.S. Congress raises the risk that successive governments will not be able to reach consensus on a fiscal plan to slow the decline in debt affordability,” Moody’s said.
The Biden administration, which has pushed massive green energy and Ukraine spending packages, pinned the blame on Republicans.
“Moody’s decision to change the U.S. outlook is yet another consequence of congressional Republican extremism and dysfunction,” White House Press Secretary Karine Jean-Pierre said.
Deputy Treasury Secretary Wally Adeyem claimed that the American economy remained “strong,” disagreeing with Moody’s decision.
House Speaker Mike Johnson (R-LA) said that Moody’s actions were a result of the “Democrats reckless spending agenda.”
“Our $33.6 trillion debt is unsustainable and poses a danger to our national security and economy,” Johnson said. “Meanwhile, the runaway inflation and soaring interest rates that have been the cornerstone of ‘Bidenomics’ have hammered families’ pocket books and made the Treasury’s costs for borrowing spiral out of control.”
“This is why the Administration and their congressional allies have lost the faith of the American people,” Johnson added, saying that Republicans were working to restore fiscal restraint to Congress.
In September the U.S. national debt eclipsed $33 trillion, just months after it hit $32 trillion in mid-June.
“Instead of hearing about solutions, we hear promises of which programs our leaders are unwilling to touch and which taxes they are unwilling to raise,” Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said. “That kind of talk is not only pandering, but it’s also downright irresponsible when we have a mess like this on our hands.”
Recent projections estimate that the U.S. debt will exceed $50 trillion by 2033