The recent downgrading of America’s credit rating ironically confirms that President Donald Trump is on the right economic track.
Moody’s recently became the last of the three major credit agencies to downgrade the U.S. AAA credit rating. Credit ratings previously had been lowered, several times by other entities, well into the Obama presidency. The U.S. is now ranked AA1 by Moody’s. There are at least two silver linings in this downgrading, both confirming that Trump is the person to put the United States on a great fiscal posture.
In taking Moody’s at its word that such a downgrade is currently necessary, the first silver lining in such a downgrade is that it may focus more attention on the successes of Trump’s debt reduction plans. The president has been in office for only four months yet the Moody’s announcement stated that the downgrade “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.”
According to the U.S. Treasury, America’s national debt to GDP ratio has increased from 100% to 123% in the past ten years (and this includes a dip from COVID era spending). Simply put, in the last decade the debt to GDP ratio has increased by almost a fifth added on to already astronomically high levels.
Trump has been in office for four months after four years of the Biden administration’s astronomically high debts. Yet, in just a brief tenure, Trump has lowered debt growth by an astonishing 92%. This is very noteworthy and should be emulated by Congress and celebrated by credit rating agencies.
Instead, and strangely, the AAA credit rating was brought down only a short time into Trump’s term.
The timing of this rating is quite suspect yet even that decision shows the Trump economic agenda is needed. The downgrade was not given during COVID or “after COVID” era that still saw record non crisis budget deficits under of the Biden administration. As former Trump administration senior advisor Camilo Sandoval pointed out, “…this is the same Moody’s that gave AAA ratings to subprime mortgage bundles in the lead-up to the 2008 crash. They were paid by the very issuers they were rating, and that conflict of interest helped tank the global economy. They eventually paid nearly $900 million in settlements.” The suit against Moody’s saw parties as diverse as then-California Attorney General Kamala Harris and then-Missouri Attorney General Josh Hawley as signatories to the settlement on behalf of their states.
There was no reason for this credit downgrade to happen during increasing fiscal success that is seen in strong job reports, as well as deficit and inflation reduction. While Moody’s saw fit to downgrade, the good economic data again is proving the naysayers wrong.
The proposed Trump tax cuts regarding Social Security taxes, tips and overtime, protecting and strengthening several of our most economically vulnerable populations are also a part of the president’s debt reduction package; not only for individuals but for America.
Such cuts will temporarily, in the future, raise the deficit to greater levels than it would be if Trump simply contented himself with the great fiscal successes of federal government budget cuts and tariff fairness. However, such tax cuts will have the effect of generating long-term economic growth as well as a sense of greater confidence and purpose which are hallmarks of a sound economy. A strong economy pushed by tax cuts will lead to greater revenues. JFK did it. Reagan did it. Trump 45 did it.
Moody’s poorly timed rating downgrade confirms Trump 47 is on the right path.
*Views expressed in this article are those of the author and not any government agency.
Larry Provost is a Columnist and Commentator in Washington, D.C. A 25-year Army veteran who served in Afghanistan and Iraq, he holds a masters of divinity from Liberty University, an M.P.S. in legislative affairs from The George Washington University and an M.A. in defense and strategic Studies from the U.S. Naval War College.
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