Republicans are struggling to come up with a cohesive message that explains why Moody's decided to downgrade the credit rating of the United States ahead of the passage of their "big, beautiful bill."
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Even though they have had 48 hours to figure out how to react to Moody’s decision to downgrade the credit rating of the United States, Republicans have still not come up with a narrative to sell their voters on. In fact, they are all over the place… and none of their explanations make any sense.
Treasury Secretary Scott Bessent, for example, called Moody’s “a lagging indicator” and suggested that its decision was purely a reflection of government spending under the Biden administration over the past four years.
That does not at all reflect what Moody’s said in justifying why it decreased the US’s credit rating from Aaa to Aa1.
“Successive US administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs,” the ratings agency said Friday. “We do not believe that material multi-year reductions in mandatory spending and deficits will result from current fiscal proposals under consideration.”
House Speaker Mike Johnson (R-LA) tried a different tactic.
He, along with some self-proclaimed budget hawks, made it sound as though the rating’s decrease is a good thing.
“Moody’s is not incorrect, but that emphasizes the very need for the legislation we’re talking about – historic spending cuts,” Johnson said.
Of course, he conveniently forgot the part where Republicans want to use those cuts to give huge tax cuts to rich people.
Moody’s did not.
“Over more than a decade, US federal debt has risen sharply due to continuous fiscal deficits,” Moody’s stated. “During that time, federal spending has increased while tax cuts have reduced government revenues.”
Tax cuts like the one Republicans now want to extend… which was one of the reasons for the downgrade.
“If the 2017 Tax Cuts and Jobs Act is extended, which is our base case, it will add around $4 trillion to the federal fiscal primary (excluding interest payments) deficit over the next decade,” Moody’s stated.
That does not sound as though the ratings downgrade is an endorsement of the “big, beautiful bill.” In fact, it sounds a lot like it has something to do with Moody’s decision.
The ratings agency is actually being kind because it largely dismisses the chaos Donald Trump has created.. at least as long as he does not meddle in the work of the Federal Reserve.
“[W]hile recent months have been characterized by a degree of policy uncertainty, we expect that the US will continue its long history of very effective monetary policy led by an independent Federal Reserve,” Moody’s stated.
And some Republicans just want to dismiss the ratings agency as a non-entity.
“It’s hardly a surprise that the greatest economic cheerleader of Biden’s economic disasters refuses to recognize that Republicans have delivered $1.6 trillion in savings as part of The One, Big, Beautiful Bill,” said House Ways and Means Committee Chairman Jason Smith (R-MO).
Finally, the most honest answer probably came from Bessent after he had some time to think about it.
“On the Moody’s downgrade, who cares?” he said on NBC’s Meet the Press. “Qatar doesn’t. Saudi doesn’t. UAE doesn’t.”
And that’s probably the only true thing any of them said about it… because the Saudis, Qatar, and the United Arab Emirates are playing an entirely different game in which money is of a secondary concern and used to buy influence
In his Navigating the Insanity columns, Klaus Marre provides the kind of hard-hitting, thought-provoking, and often humorous analysis you won’t find anywhere else.
