In 2011, Standard & Poor’s downgraded the United States’ credit rating for the first time, lowering its rating of long-term federal debt from its top grade of AAA to AA+. Republicans scrambled to blame the White House — they pushed the “Obama Downgrade” label, which too many in the media quickly embraced — despite the fact that it was the GOP’s debt-ceiling threats that helped make this happen.
Twelve years later, in 2023, Fitch also downgraded its credit rating for the U.S. government, from AAA to AA+, in the wake of another Republican debt ceiling standoff, with the ratings agency specifically pointing to the “deterioration in standards of governance” in the nation’s capital. Republicans again tried to blame Joe Biden, the incumbent Democratic president at the time, but that didn’t make any sense.
There was still one other ratings agency, however, that hadn’t downgraded the nation’s credit rating — at least, that is, until late last week. NBC News reported:
Moody’s Ratings cut the United States’ sovereign credit rating down a notch to Aa1 from the Aaa, the highest possible, citing the growing burden of financing the federal government’s budget deficit and the rising cost of rolling over existing debt amid high interest rates.
In terms of the practical economic impact, neither the 2011 nor the 2023 downgrades did meaningful harm, though as NBC News’ report added, the decision from Moody’s might end up lifting the yield that investors demand in order to buy U.S. Treasury debt and could dampen sentiment toward owning U.S. assets. Time will tell.
But in terms of the political impact, Donald Trump’s White House tried to blame Biden for the developments — a go-to move for this administration — despite the fact that deficits exploded during Trump’s first term and were far smaller under Biden.
Even more interesting, however, was the reaction from House Speaker Mike Johnson. The New York Times noted:
In his appearance on ‘Fox News Sunday,’ Speaker Mike Johnson tried to spin Moody’s recent downgrading of U.S. credit worthiness away from House Republicans’ multi-trillion-dollar spending package and recast it as a product of ‘the Biden spending spree.’ He argued that the inferior credit rating was evidence that ‘emphasizes the very need for the legislation we’re talking about.’
A day later, his fellow Louisiana Republican, House Majority Leader Steve Scalise, pushed the same line during an interview on CNBC. This need not be complicated. Moody’s downgraded the United States because of the country’s national debt and fiscal future. The GOP’s reconciliation bill, filled with massive tax breaks, would add nearly $3 trillion to projected budget deficits over the next decade. (As for the idea that there was a “Biden spending spree,” now seems like a good time to remind everyone that government spending has gone up, not down, since Donald Trump returned to power.) In other words, the fiscal problem that led to the downgrade would get worse because of the Republican’s megabill, which is the opposite of the line GOP leaders have brought to the public. The party might not want to admit that this downgrade is a poorly timed embarrassment for Republicans, but that’s the reality.
Steve Benen is a producer for "The Rachel Maddow Show," the editor of MaddowBlog and an MS NOW political contributor. He's also the bestselling author of "Ministry of Truth: Democracy, Reality, and the Republicans' War on the Recent Past."
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