Moody’s, one of the world’s leading rating agencies, recently announced that it has revised its outlook for the United States’ credit rating from stable to negative. This decision was based on the agency’s view that the nation’s continuing political dysfunction is impeding progress on developing and executing economic policies that are in the best interest of the economy.
The United States’ credit rating is a reflection of the government’s ability and willingness to repay its debts, and Moody’s outlook ruling could potentially have a negative impact on the country’s ability to borrow in the future. Furthermore, the risk of rising interest rates on existing government debt could increase the cost of borrowing, posing a significant burden on taxpayers.
At the heart of the problem lies the lack of meaningful cooperation between the government branches. One recent example of this disunity is seen in the ongoing debate over the budget for the 2017 fiscal year. Despite near-unanimous agreement on the need to allow more spending in the short term, Congress has failed to act, leaving the budget in limbo and increasing uncertainty for shareholders and investors.
Moody’s stated that it is less confident in the government’s ability to ensure essential functions will continue or to allow anticipatory measures until the political environment improves. With the conflict between the government branches intensifying, Moody’s has become increasingly concerned that it will be unable to influence the direction of fiscal policy, creating a potential long-term drag on the economy.
Moody’s decision to change its outlook is a reminder of how politics affects the economy and the importance of responsible leadership. As Moody’s noted in its announcement, if the nation’s political system can produce meaningful fiscal stimulus and overcome its current dysfunction, the US’ credit rating may be able to recover. For now, though, the U.S. must continue its current policy of austerity and remain vigilant in its efforts to address the nation’s mounting fiscal challenges.
Moody’s, one of the world’s leading rating agencies, recently announced that it has revised its outlook for the United States’ credit rating from stable to negative. This decision was based on the agency’s view that the nation’s continuing political dysfunction is impeding progress on developing and executing economic policies that are in the best interest of the economy.
The United States’ credit rating is a reflection of the government’s ability and willingness to repay its debts, and Moody’s outlook ruling could potentially have a negative impact on the country’s ability to borrow in the future. Furthermore, the risk of rising interest rates on existing government debt could increase the cost of borrowing, posing a significant burden on taxpayers.
At the heart of the problem lies the lack of meaningful cooperation between the government branches. One recent example of this disunity is seen in the ongoing debate over the budget for the 2017 fiscal year. Despite near-unanimous agreement on the need to allow more spending in the short term, Congress has failed to act, leaving the budget in limbo and increasing uncertainty for shareholders and investors.
Moody’s stated that it is less confident in the government’s ability to ensure essential functions will continue or to allow anticipatory measures until the political environment improves. With the conflict between the government branches intensifying, Moody’s has become increasingly concerned that it will be unable to influence the direction of fiscal policy, creating a potential long-term drag on the economy.
Moody’s decision to change its outlook is a reminder of how politics affects the economy and the importance of responsible leadership. As Moody’s noted in its announcement, if the nation’s political system can produce meaningful fiscal stimulus and overcome its current dysfunction, the US’ credit rating may be able to recover. For now, though, the U.S. must continue its current policy of austerity and remain vigilant in its efforts to address the nation’s mounting fiscal challenges.
