Moody's downgrade sparks pushback from US Treasury

Speaking on CNN, Bessent sought to lay blame for the downgrade-stripping the United States of its last triple-A credit rating-on the prior administration of Joe Biden

  • Published:
  • 19/05/2025 10:47 AM

Federal Reserve Chair Jerome Powell. Image: Andrew Harnik / Getty Images North America / Getty Images via AFP

US Treasury Secretary Scott Bessent on Sunday dismissed the downgrading of the country's credit rating by major agency Moody's, saying it was "a lagging indicator."

Speaking on CNN, Bessent sought to lay blame for the downgrade—stripping the United States of its last triple-A credit rating—on the prior administration of Joe Biden.

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"We didn't get here in the past 100 days," he said. "It's the Biden administration and the spending that we have seen over the past four years that we inherited, 6.7 percent deficit-to-GDP, the highest when we weren't in a recession, not in a war."

But Moody's, in announcing its downgrade Friday, pointed not only to a years-long trend of growing debt-which it blamed on "successive US administrations and Congress"-but to an expectation that federal deficits will continue to grow for the next 10 years.

The agency predicted a widening of federal deficits to almost nine percent of economic output by 2035, "driven mainly by increased interest payments on debt, rising entitlement spending, and relatively low revenue generation."

Bessent, however, insisted that the administration is on track to produce economic growth that will outpace the rise in debt.

"We are determined to bring the spending down and grow the economy," he said.

Moody's was the last of the three major US ratings agencies to award the United States a triple-A rating. S&P cut the US rating in 2011. Fitch followed 12 years later.

The Moody's downgrade came amid added uncertainty over the US economy, with US President Donald Trump's flagship spending bill—which aims to revamp and renew a roughly $5 trillion extension of his 2017 tax cuts—failing to pass a key vote in Congress.

Republican fiscal hawks sunk the vote on advancing the bill in a significant, but not necessarily lethal, setback for his tax-and-spending policies, raising doubts that the sprawling package can pass the full House of Representatives next week.

The Moody's downgrade, said Republican congressman French Hill, who chairs the House Financial Services Committee, "is a strong reminder that our nation's fiscal house is not in order."