The White House on Friday assailed a decision by Moody's Ratings to lower the US credit rating, casting it as a political decision.
Steven Cheung, a spokesman for President Donald Trump, singled out Mark Zandi, an economist for Moody's Analytics, in a post on X, accusing him of being a long-time critic of the administration's policies.
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“Nobody takes his ‘analysis' seriously. He has been proven wrong time and time again,” Cheung said. Moody's Ratings is a separate group from Moody's Analytics. Zandi did not immediately reply to a request for comment on Friday evening.
The US was downgraded by Moody's on Friday in a landmark move that casts doubt on the nation's status as the world's highest-quality sovereign borrower. In lowering the US to Aa1 from Aaa — the highest investment-grade position — the credit rater joins Fitch Ratings and S&P Global Ratings in downgrading the world's biggest economy.
“While we recognize the US' significant economic and financial strengths, we believe these no longer fully counterbalance the decline in fiscal metrics,” Moody's said in a statement Friday.
In explaining the decision, the credit assessor pointed out that for more than a decade, “US federal debt has risen sharply due to continuous fiscal deficits” and cited pressure from higher interest rates.
“This one-notch downgrade on our 21-notch rating scale reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns,” Moody's added in the statement.
Joe Lavorgna, former chief economist for the White House National Economic Council during Trump's first term, called the timing of the announcement “just very strange” in an interview on Bloomberg Television Friday. He said that on the revenue side, Moody's assumptions were “too pessimistic” on growth.
“Certainly the fiscal hawks will use this as a reason to be more careful on the outlook,” Lavorgna added.
Trump has argued that his economic agenda, centered on tax cuts, reduced regulations and sweeping tariffs to bring more manufacturing jobs to the US, would promote strong growth.
While it's unclear if the downgrade will lead to policy changes in Washington, the move comes with the federal budget deficit running near $2 trillion a year — or more than 6% of gross domestic product. Higher interest rates over the past several years have also pushed up the cost to service the government's debt.
At the same time, lawmakers are working on a massive tax package that would renew cuts passed in 2017 during Trump's first term and provide additional reductions he promised during the last election. The Moody's decision was announced just hours after a key House committee failed to advance the tax package over the concerns of hardline conservatives worried about the bill's cost.
The tax bill is likely to add to deficits in the coming years but is a top priority for the president. The bill includes roughly $1.5 trillion in spending cuts over the next decade but that would not cover the roughly $4 trillion in tax cuts outlined in the plan.
Trump earlier Friday criticized lawmakers he dubbed “GRANDSTANDERS,” urging his party to quickly move on the tax bill and the White House warned Republicans that the administration expects all of them to back the package.
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