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Moody’s Investors Services lowered its U.S. credit rating outlook to negative from stable this week amid the threat of another government shutdown.
“Ongoing political polarization within the U.S. Congress increases the risk that successive administrations will be unable to reach consensus on a budget plan to slow the decline in debt affordability,” Moody’s said in a statement.
It added: “Faced with higher interest rates and without effective fiscal policy measures to reduce government spending or increase revenues, Moody’s expects U.S. budget deficits to remain very high, significantly weakening debt affordability.”
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House Democrats are trying to craft a temporary spending measure to prevent a government shutdown next Friday. (Stefan Zaklin/Getty Images/File / Getty Images)
House Republicans are expected to try to avoid a shutdown by passing a temporary spending measure on Saturday, as newly elected House Speaker Mike Johnson continues to negotiate with members before federal funding expires next Friday .
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“While Moody’s statement 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 government bonds are the safest and most liquid asset in the world.”
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White House spokeswoman Karine Jean-Pierre called it “another consequence of Republican extremism and dysfunction in Congress.”
While Moody’s maintained the United States’ AAA credit rating, the other two major rating agencies, S&P and Fitch, downgraded it to AA+, which Fitch also did in August. S&P lowered its rating in 2011.
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The deficit rose from $1.38 trillion to $1.7 trillion in the fiscal year that ended Sept. 30.
Portal contributed to this report.