The rating agency also cited political brinkmanship in Washington as a factor behind its decision to slash the outlook for U.S. government debt.
Credit rating agency Moody’s has cut its outlook for the U.S. government from “stable” to “negative” due in large part to out-of-control spending.
Moody’s said in a Nov. 10 announcement that it has lowered its ratings outlook on the U.S. government to “negative,” citing a lack of restraint on spending while predicting that deficits will remain “very large” for the foreseeable future.
“In the context of higher interest rates, without effective fiscal policy measures to reduce government spending or increase revenues, Moody’s expects that the US’ fiscal deficits will remain very large, significantly weakening debt affordability,” the agency said.
Too much government spending was also the reason why rating agency Fitch went a step further than Moody’s and downgraded America’s credit rating from AAA to AA+ over the summer.
While Moody’s decided to cut the U.S. outlook to “negative,” it opted to keep the country’s overall rating at AAA.
Predictably, the U.S. Treasury Department objected to the outlook downgrade, much as it did when Fitch cut the rating.
“While the statement by Moody’s maintains the United States’ AAA rating, we disagree with the shift to a negative outlook,” Deputy Treasury Secretary Wally Adeyemo said in a statement. “The American economy remains strong, and Treasury securities are the world’s preeminent safe and liquid asset.”
The outlook cut comes hot on the heels of reports that interest payments on the massive pile of U.S. government debt have exceeded $1 trillion per year for the first time in history, on roughly $33.6 trillion of total public debt outstanding. Little improvement is in the cards on either count.
Debt In Focus
U.S. government outlays for interest are expected to rise from roughly 2.5 percent of gross domestic product (GDP) in 2023 to 6.7 percent in 2053, according to the latest long-term budget outlook from the Congressional Budget Office (CBO).
The level of America’s public debt is also expected to rise, reaching around 181 percent of GDP by 2053, up from the current 98 percent of GDP, according to the CBO.
By Tom Ozimek
Read Full Article on TheEpochTimes.com
