Republicans Divided Over US Credit Downgrade Amid Tax Bill Debate: Moody’s downgraded the US credit rating from AAA to Aa1 on Friday. The move split Republicans, with some blaming Biden’s policies and others urging fiscal caution. The downgrade came as GOP lawmakers stalled a major tax bill over deficit concerns. Moody’s cited rising debt and weak spending controls. The debate highlights growing tensions over America’s financial future.
Also Read | US Credit Rating Downgraded by Moody’s Amid Rising Debt Concerns
Republicans Divided Over US Credit Downgrade Amid Tax Bill Debate: Insights
- Moody’s downgrade reflects long-term US fiscal instability.
- Republicans disagree on whether Biden or past policies caused the downgrade.
- The tax bill faces delays due to deficit fears from fiscal conservatives.
- Debt could hit 134% of GDP by 2035 without major reforms.
- A small GOP faction could block the bill without spending cuts.
Background
The US has struggled with rising debt for years. Moody’s is the last major agency to downgrade America’s credit rating. Previous administrations failed to curb deficits. Trump’s 2017 tax cuts increased borrowing. Now, Republicans debate extending those cuts despite the debt risks. Fiscal hawks demand spending reforms before approving new tax breaks.
Main Event
Moody’s downgraded the US credit rating, citing weak fiscal policies. Hours earlier, five GOP lawmakers blocked a tax bill over deficit fears. The bill could add trillions to the $36.2 trillion debt.
Republicans reacted sharply. Tax Committee Chair Jason Smith called the downgrade a “cover-up” of Biden’s failures. Others, like Florida’s Jimmy Patronis, dismissed Moody’s as “irresponsible.”
However, fiscal conservatives saw the downgrade as validation. Andy Harris said it proves the need for spending cuts. Without changes, debt may reach 134% of GDP by 2035.
House Speaker Mike Johnson faces a tight vote. With a 220-213 majority, just a few holdouts can derail the bill. Talks continue, but time is running out.
Amid the fallout from a U.S. credit downgrade, GOP members debate the path forward on tax legislation, revealing deep party rifts.
Photo Credits: REUTERS.
Implications
The US credit downgrade could raise borrowing costs, hurting businesses and taxpayers. If the tax bill fails, Trump-era cuts may expire, raising taxes for millions.
Fiscal conservatives want stricter budget controls. Yet, cutting Medicaid and food aid risks backlash. Democrats argue the GOP’s tax plans favor the wealthy over working families.
Conclusion
The US credit downgrade has deepened GOP divisions. Without a deal, economic risks grow. Will Congress find a balance between tax cuts and debt control? The next few days will decide.
