It is a coup for Donald Trump’s economic policy: the Moody’s agency dropped this Friday, May 16, the United States note, while tensions linked to its commercial war, especially with China, just began to calm down.
The increase in debt said
For the first time, the agency withdrew from the American debt its maximum note of AAA and degraded it to AA1, adding a stable perspective. He justified his decision for the increase in the debt of the United States and its cost for the federal budget.
The White House reacted to the report on X, Communication Director Steven Cheung criticizing Mark Zandi, chief economist of Moody’s Analytics.
“No one takes their ‘analysis’ seriously. It has been shown that it was wrongly wrong,” Steven Cheung wrote.
“Successive governments and elected officials have not been able to accept measures to reverse the trend that leads to a significant annual deficit. We do not believe that reductions in expenses and the deficit can be carried out with the Budget Law currently in discussion,” the agency justified in a press release.
Several elected representatives of the Republicans had a key vote on the progress of a megaproject of law on Friday, granted as the centerpiece of President Donald Trump’s program.
In particular, this must specify the extension of the tax credits granted during their first mandate before its expiration, at the end of the year.
The bill also provides $ 880 billion in budget cuts for ten years, mainly with respect to health insurance programs of 70 million Americans with modest income.
However, the Republican Party is divided on the subject, depending on the priorities of the various elected officials, which complicates the process and has doubts that this main project can be examined next week by the House of Representatives.
Therefore, despite the exhortations of Donald Trump in his social network of truth, five republican elected officials were allied with the Democrats to reject the text before the Budget Commission of the House of Representatives.
“A direct warning”
Moody’s comes to bring arguments to those who oppose the project, saying that he hopes, during the next decade, “even greater deficit, with an increase in expenses, while the income will remain stable. This will strengthen the weight of the debt in public finances”, in case of validation of the invoice.
For the chosen Republican French hill, the agency’s decision is “a powerful reminder that things are not in order. We want to restore budget stability and attack the structural causes of our debt.”
The decrease in the note “is a direct warning: our budgetary perspectives are deteriorating, and the Republicans of the House of Representatives are determined to worsen them,” said Brendan Boyle, a Democrat chosen in the House of Representatives and member of the Budget Commission.
“The question is whether Republicans are ready to realize the damage they are causing,” Brendan Boyle added.
The third important agency to reduce its notation
However, the US economy remains “unique” due to “its depth, the high income it generates, the strong potential growth and its ability to innovate and strengthen its productivity,” which encourages the agency to maintain its stable perspectives immediately.
It makes the government “establish tax reforms that make it possible to reduce speed significantly and even reverse the deterioration of debt and public deficits, either increasing income or reducing expenses.”
It was the last of the three main qualification agencies that had not reduced US debt and keep it in the highest note.
His Fitch competitor degraded him with a notch, in AA+, in 2023, believing that repeated political crises in the debt roof would probably erode the governance of the country.
Standard and Poor’s Global Ratings was the first important qualification agency to deprive the United States of “Triple A” in 2011, and since then it has not indicated the note, which is still in AA+.
Source: BFM TV
