For the second time in history, credit officials have lowered the U.S.’s credit rating from its top mark of AAA to AA+ — and the reasoning provided for the decision strongly suggests that it is the result of Republican maneuvering and discord.
One of the driving forces behind the downgrade was the January 6, 2021, attack on the Capitol, according to HuffPost. The outlet cited an anonymous U.S. administration official who told the publication that the attack was “repeatedly” cited by officials behind the downgrade at Fitch Ratings, one of the big three credit firms.
This was further supported by an interview on Wednesday with Richard Francis, a senior analyst at Fitch, who told CNBC that a “deterioration in governance” in recent decades, as evidenced particularly by January 6, was a reason for the downgrade.
“You can highlight a few key elements. One would be January 6,” Francis said.
But the January 6 attack — incited by former President Donald Trump and the Republican Party in order to invalidate the 2020 election — was just one reason, Francis said.
Other reasons cited by Francis and Fitch include constant brinkmanship on the debt ceiling, rising government deficits, the debt to GDP ratio and coming budget challenges like Medicare and Social Security insolvency — issues that have resulted, time and again, from Republicans’ refusal to run the government functionally.
The recent scuffle over the debt ceiling, for instance, was caused in large part by Republicans’ constant shifting of the goal posts over the national debt. Republicans openly admitted that they were holding the entire economy “hostage” over the debt ceiling, threatening not only to cause a downgrade but a tanking of the U.S.’s creditworthiness if Democrats didn’t fold to their extremist demands to indiscriminately slash non-defense government programs.
Ultimately, Republicans got a host of provisions to tighten the purse strings on vital social programs included in the package to raise the debt ceiling, which some Democrats had pushed to pass without riders. Though many observed that Democrats could have taken moves to bypass Republicans on the debt limit, Republican obstruction over the debt ceiling is a tale as old as time.
The GOP loudly blamed the federal deficit for their initial refusal to raise the debt ceiling. But reports have found that the federal debt, too — and the debt to economy ratio Fitch cites — is in large part a result of Republican maneuvering. Trump added $8 trillion to the federal deficit, a figure that Republicans rarely cite; meanwhile, Republicans pursued extending major Trump tax cuts that would pile even more trillions on top of the debt, even as they threatened to tank the economy over the federal debt earlier this year.
In fact, it is major GOP tax cuts — which have largely benefited the wealthy and corporations — that have driven an increase to the debt to GDP ratio. An analysis by the Center for American Progress found earlier this year that the increases to the debt ratio have been driven mostly by Trump- and George W. Bush-led tax cuts since 2001. If increases to the debt ratio caused by the Great Recession and COVID-19 stimulus packages are excluded from the analysis, the tax packages are responsible for 90 percent of the increase, the analysis found.
Meanwhile, the victims of the tax cuts — the government programs that taxes help fund — are left floundering for cash, and evidently causing instability for the U.S.’s creditworthiness. Indeed, the solvency of Medicare and Social Security were cited by Fitch as “medium-term challenges” that U.S. lawmakers have thus far failed to tackle.
Republicans have made it no secret that they’re seeking to slash Social Security and Medicare. Lawmakers like Sen. Bernie Sanders (I-Vermont) have put forth proposals, for instance, to ensure that Social Security is solvent for the next 75 years. But rather than lengthen Social Security and Medicare solvency by simply increasing funding for the programs, Republicans are seeking to slash funding and benefits.
The Biden administration criticized Fitch’s decision this week, but hammered on Republicans’ contribution to the downgrade.
“This Trump downgrade is a direct result of an extreme MAGA Republican agenda defined by chaos, callousness, and recklessness that Americans continue to reject,” Kevin Munoz, a Biden campaign spokesperson, said in a statement. “Donald Trump oversaw the loss of millions of American jobs, and ballooned the deficit with the disastrous tax cuts for the wealthy and big corporations.”
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