Biden Spending Blows United States Credit Rating
We have now seen the first major economic impact of Bidenomics – and it is a disaster. On August 1st, Fitch Ratings downgraded the United States’ credit rating from triple-A to AA+. That may not seem like much if you were grading a college term paper, but it has an enormous impact on the ability and cost of borrowing – to finance the National Debt or your next car.
This is the second time a credit rating service has downgraded the United States to AA+. In 2011, Standard & Poor’s announced a similar downgrade. Now, only Moody’s maintains America’s triple-A rating.
The primary reason for the downgrade is the fear that the United States will not be able to pay off the growing debt in the future. As with the average person, there comes a time when an increasing debt load makes it impossible to pay it off. With regard to personal debt, it is often referred to as the “credit trap” – that point when the debt service (interest) cannot be paid on a timely basis. That is when folks generally go into bankruptcy. That is when a nation defaults.
It can be said that the lower rating was due to Washington’s reckless spending policies over a long period of time. The 2011 downgrade did little to nothing to get Congress to take excessive spending seriously. The immediate cause of the Fitch downgrade was … President Biden’s irresponsible big spending at a time cuts were needed. The flame that lit the powder keg was Bidenomics.
In response, an angry White House blamed the downgrade on Trump and the political chaos coming out of the January 6 Capital Hill riot. With Biden’s own ratings in the toilet – and his prospective ability to beat Trump in a 2024 match-up in question – the White House will blame everything on Trump.
That is a dog that will no longer hunt. Just as the decision to surrender in Afghanistan was solely Biden’s, the decision to engage in reckless spending at a time the debt was burgeoning was Biden’s exclusively. It was his proposals against the warnings of Republicans and conservatives that blew away America’s triple-A rating.
This will have a negative impact on interest rates up and down the line. More than on Uncle Sam’s borrowing. It will affect state and local government, corporations, banks, and individuals. Interest rates on car loans and mortgages are destined to rise. As business pays more interest, those costs are passed on to the consumer in the form of price increases. If you use credit cards for purchases, you will be paying more at the counter and paying more interest to the credit card companies.
Ironically, it will require the federal government to either increase taxes or borrow even more at higher interest rates. In either case, it is the American taxpayer who will suffer. The downgrade is likely to suppress the stock market and even impact on unemployment.
The American economy is large enough and strong enough to endure the drop in credit rating for the time being. But there will be a lot of collateral damage. It will not trigger an immediate economic catastrophe – but will move us closer to one. Nations – such as China and Russia – who are working to take down the dollar as the world currency will now be further emboldened. Their arguments against the United States have been empowered to a greater degree.
Understandably, the White House strongly disagrees with the Fitch decision. The President has been described as “very angry.” In a reality defying statement, White House Press Secretary Karine Jean-Pierre said that the Fitch downgrade … “defies reality.” Secretary of the Treasury Janet Yellen said that the decision was “arbitrary and based on outdated data.”
Just for giggles, Yellen also blamed “Republican extremism.” That makes sense only if you believe that limited spending and fiscal responsibility is extremely repugnant to the tax (borrow)-and-spend progressive Democrats.
To use one of Biden’s memorable past comments, this is a “big (effing) deal.” However, if you are an acolyte of left-wing media, you may not even know about this event. They see their job as burying any bad news if it reflects negatively on Biden or the radical left.
If the downgrade has ANY conceivable positive impact, it could — just could – get policymakers to act more responsibly with the taxpayers’ money. Just do not hold your breath.
So, there ‘tis.
More right wing BS. Have you ever examined how much spending Trump did, after he campaigned on eliminating the debt? First he passed a huge tax cut which blew a hole the size of Jupiter through the budget, then he spent untold $trillions on pandemic relief. He also forced us out of Afghanistan, leaving it to Biden to get us out on Trump’s terms. Biden is spending money we don’t have, but Trump outspent Biden by a very wide margin. We have Trump to thank for the inflation.
Andy … You are missing relevant facts. I agree that Trump’s spending was a problem that contributed to the shaky credit rating — although much of the problem was Covid related. I pervious wrote that Trumps last stimulus money was unnecessary and inflationary — as was Biden’s stimulus money. BUT… I also look at the fellow who gave America’s credit rating the coup de grace. That was Biden’s ENORMOUS spending programs. If Biden had acted responsibly and cut spending, there would not likely have been a credit rating issue. Also, you fail the same test with regard to Afghanistan. NOTHING Trump did or agreed to prevented Biden from changing the situation. I think Trump was wrong to discuss withdrawal with the Taliban. But Trump’s agreement was not binding on Biden. The decision to withdraw — when and how — was completely at the discretion of Biden.
As the court cases mount, so does Horist his attacks on all things Biden, kids especially, and all things Democratic. This time, Horist boldly claims what all Trumpers on FOX claim: “ the first major economic impact of Bidenomics – and it is a disaster.” Over three years of the Biden administration and only now — “the first major economic impact…..” Yeah, right. Guess Horist forgot about inflation and all the other “first major Biden economic disasters” they spew every week.
He’s got his reasons: “The primary reason for the downgrade is the fear that the United States will not be able to pay off the growing debt in the future.”
Except the owner of the downgrade, Fitch added quite a bit more when they said: “The rating downgrade of the United States reflects the expected fiscal deterioration over the next three years, a high and growing general government debt burden, and the erosion of governance relative to ‘AA’ and ‘AAA’ rated peers over the last two decades that has manifested in repeated debt limit standoffs and last-minute resolutions.”
That’s three things:
1. Expected fiscal deterioration from 2023 to 2026 (thanks for the vote of confidence Horist in blaming Biden as being in charge in 2025 and 2026.)
2. Debt burden – existing and future (existing is mostly owned by Trump and no one but Trump and the Republicans.)
3. The erosion of governance compared to our peers (can you say debt limit clusterfuck)
If Horist cannot see shared responsibility, I want what he’s smoking :>) Actually he might be on the shrooms.
Fitch says a lot more on each of these subjects, but here’s what they consider to be unaddressed: “Over the next decade, higher interest rates and the rising debt stock will increase the interest service burden, while an aging population and rising healthcare costs will raise spending on the elderly absent fiscal policy reforms. The CBO projects that interest costs will double by 2033 to 3.6% of GDP. The CBO also estimates a rise in mandatory spending on Medicare and social security by 1.5% of GDP over the same period. The CBO projects that the Social Security fund will be depleted by 2033 and the Hospital Insurance Trust Fund (used to pay for benefits under Medicare Part A) will be depleted by 2035 under current laws, posing additional challenges for the fiscal trajectory unless timely corrective measures are implemented. Additionally, the 2017 tax cuts are set to expire in 2025, but there is likely to be political pressure to make these permanent as has been the case in the past, resulting in higher deficit projections.” Again, shared responsibility and neither Biden or Congress addressing aggressively, or at all.
Rather than listen to Horist, or my, spin, here’s what they really said: “https://www.fitchratings.com/research/sovereigns/fitch-downgrades-united-states-long-term-ratings-to-aa-from-aaa-outlook-stable-01-08-2023.”
I have been saying since before Obama that we are in a shit pot full of trouble and have been continually proven wrong since before Obama. Yet I still say it today because IF we go too far, and IF it happens, you ain’t never felt anything like an economic collapse. And no one knows where the tipping point is and what the precipitating factor will be. And there’s enough blame for everyone and every political party. Not be mention the new generation does not have a clue for the situation nor the memory of past actions. After WWII and with constant pressure, it took around 35 years to whip that debt into shape before Reagan started the process we continue today to steadily increase the debt, sometimes greatly like Obama, and one time, tragically, under Trump. Biden is slow walking that back but not big enough and not fast enough. And, unlike Horist and his ilk, the problem is not Biden spending alone. Most Bided expenditures look to build assets in America, especially in the middle class where so much economic help is needed. Slashing budgets alone will not do it. And we have seen the disaster that giant tax cuts. without appropriate growth, produce. While I believe we can beat 35 years, it will take more than a decade of dedicated efforts. IMO.
But again, Biden is the President, he can put his hand on the tiller, but we need a working Congress to quit casing Biden’s kids and get to work governing the nation, especially the budget and debt.
Frank Stetson … why do you lie … or are you not able to read, comprehend and remember. You say I do not understand shared responsibility in the economics and inflation issues. Wrong. Wrong… Wrong. I have consistently written that Trump’s spending and his final stimulus money was unnecessary and inflationary. But, Biden continued and accelerated the excessive spending policies. It was the straw to break the camel’s back. That is why the credit downgrading came after three years of Biden and his spending programs. And in terms of Congress, Republicans opposed the Biden spending and have offered cuts. Democrats lock stepped behind Biden spending — with a little cutting back thanks to Manchin. You claim that I only write negative about Democrats is wrong, wrong, wrong. I wrote positive stuff about Manchin and Sinema. I have written positive stuff about congressional Ds supporting Ukraine.
You keep suggesting that I am some sort of supporter of Trump. I have made it clear that I do not like his personality and I have written against some of his policies. With regard to Biden, I do not like almost all off his policies … I do believe he has been gaming the system for money … and I do not like his ward heeler personality.
I fear that you hatred of Trump and your obsessive desire to attack me leads you to a lot wrong claims and erroneous opinions.
“I have consistently written that Trump’s spending and his final stimulus money was unnecessary and inflationary” and so, you know it well but OPTED to not mention it during an pending Presidential election. I would have mentioned your past Trump drubbing on the subject, but since you were mum of it here, I did not want to presume what the mind of Larry was thinking ::>)
“But, Biden continued and accelerated the excessive spending policies.” Ya know, I re-looked this just for you…..and yes, Biden has continued BUT there has not been an acceleration as Republicans like to dream. Also, his GDP, while not good enough, is better than Trump’s meaning the bottom line, the deficits are better. Still not good enough and, like Trump who lied between his teeth about GDP projections from the tax cuts, Biden is …let’s call it optimistic until it becomes a lie, about upcoming revenues.
“That is why the credit downgrading came after three years of Biden and his spending programs. ” I posted what the folks doing the downgrade said and while your timing was right, they warned us and it was much more than you noted, as noted by the originators above.
Republican cuts were ridiculous and unfocused, they don’t want to work with anyone as the debt limit fiasco shows. I do agree that Democrats want to spend too much, am glad Biden reigns them in, like you, I want a lot more, but unlike you, not the way you do.
“I wrote positive stuff about Manchin and Sinema.” that’s just so funny, on so many levels.
You called me a liar here, I did not. It is not a lie to take you for your word. It is not a lie to not dredge up every freaking thing you said to see if you said it different, or added more information in the past. You are a prick for that, with all due respect.
“I fear that you hatred of Trump and your obsessive desire to attack me leads you to a lot wrong claims and erroneous opinions.” No need to fear. It’s OK. Why do you feel a difference of opinion, much less one that is fact-based, is an attack? Is anyone with a different idea, an attacker, an enemy? If you feel they are coming after you, do you want to come after them?
As millions of people reading this will say! Say what you want, life for ALL was better when Trump was in office.
Just think what could have been possible for this country to achieve without all the media BS Trump had to endure every day.
But we can not have that right. ( what would the View talk about )
I know a lot of people have negative views of Trump, but he spent 4 years in the White House pushing a car up a hill with a rope.
The Obomiden administration has nothing but decimated this country, morally, financially, and the things done have gone against all logic.
At this moment we have the worst most Crooked President in history in office. Third world country’s laugh at us and rightly so.
I have to at this moment things are so bad I wish ” Bill Clinton ” was in place of Biden.
Hillary is just to Evil to ever get the job and even Democrat’s agreed with me in 2016.
Larry is correct, Yellen is a clown. Another Appointee payback drone to do what Obama tried to do only other people in that position had more intestinal fortitude to do the correct thing.
Hmmm, we can not down grade the American Dollar unless we create a reason to: and there you have it.
Finally Obamas dream of dragging this country through the Democratic MUDD!
“Say what you want, life for ALL was better when Trump was in office.”
That’s what they said in Atlantic City before the Trump buildings were condemned and taken down in bankruptcy.
Trump promised to bring factories and coal back to America. Here’s WV’s gdp which clearly shows that while they may love Trump, they may think he brought them golden treasures, but the truth is they got the shaft, and not the mine type…..and, worse yet, they don’t even know it. Same with you no doubt.
year/GDP for West Virginia
2017 74.8b
2018 79.2
2019 79.3
2020 76.5 yeah boy, that’s rocking success
2021 85.4 there’s a new sheriff in DC……
2022 95.5 and he’s making a lot happen
Yet, I am guessing you all think WV benefitted more under Trump the GDP-destroyer…..versus the evil Biden, the economic disaster.
I do agree —- you think it was better, and for many, it was, but it was false hope based on misplace tax cuts coupled with over-the-top spending like we have never seen, even outside the pandemic years. And what did you get: a wall. Over 1,000 kids still not reunited with their families, the worst GPP growth since Hoover coupled with the highest deficits of any US President in history.
He lies about how good it is. He borrows you into the shithouse. He produces little. He and his buddies profit. Just like he’s taking your money now for his campaign but spending it on his legal problems, which are of his own making no matter how big a victim he portrays himself as.
Frank Stetson … I think the people are the best judge of their own economic situation. Virtually every poll has Trump besting Biden on handling the economy. Most people believe the nation is going in the wrong direction. Inflation is still a problem Democrats have been saying for the past year that they only have a messaging problem. They say that we the people do not understand how good Biden has been for us economically — among other issues. You can say many things about Bidenomics, but that they have made the average person’s life better is not one of them. And rather than deal with the failure of Bidenomics, you keep distracting with trashing Trump. Even is you were right about Trump, it has nothing to do with Biden’s failures. You are a master of whataboutism. LOL I guess when you cannot defend, you need to distract.
Horist says “I think the people are the best judge of their own economic situation” which, if believed, pretty much shows he knows little about economics. Or, based on how the average American handles their finances, people.
Most important is the thing you learn in Econ101: an individual is not an economy. In economics, one shining light is that, in a free market, the economy will always return towards equilibrium but a number of individuals may be harmed along the way. IOW — the system is solid but people may suffer. Thus, recession, inflation, may be the economy correcting itself, but individuals may suffer.
I am not saying that is the case here and I agree with Horist that the economy is uneven and some people profit, some are hurting. We know the middle class has been hurting for decades, both parties involved, and Trump gave out more “free money” than anyone in history. Many felt good about it; I lose thousands every year to his tax plan that targets blue States unfairly or, at least, differently that they have been handled for decades. I am just fortunate in being able to duck and weave leveraging other aspects of my “personal economy.”
Yes, people think Trump is the better choice for the economy. But Trump lies, many believe lies, and there we are. Trump used our money like heroin, giving out free fixes, and pushing the bill off to the next year, or better yet, the next guy. Biden is investing in our future, and investments take time to return results (he also offered some free money, and that kicked him in the inflation ass). But even if the economic numbers say different, Horist is correct about popular opinion. This can change in a heartbeat, but again, Horist is right, the numbers don’t matter, what people feel at the kitchen counter, at the grocery checkout line, is what matters in the polls. Hopefully, for Biden, he will continue upping his economic numbers and some of it will trickle down to the folks needing help. However, we are on the brink of recession, much is confused by the covid clusterfucked economy, but we are dancing around it, mark my words. If it hits, Biden’s 2024 run is toast and we will suffer whatever Trump retaliates with. He better watch out.
Yes, inflation is a real problem, not a messaging problem, and it is not gone. It’s around 3% and if we can knock another point we will be there. I doubt too many are holding purchases due to inflation anymore. I am guessing most people don’t even notice it as more prices are coming down than going up. But it still stings. Horist and the Republicans keep baying at the moon on this one; I don’t think many are listening.
But a lot of folks are still hurting, even in West Virginia.
Bidenomics, IMO, is better than Trumpenomics albeit not the free-money-heroin that Trump offered the masses which is a false flag that things are looking good. Always has been since the days of Reagan began the debt runup.
Our GDP growth is still too low to drive this spending, these deficits, and that drives much even at the kitchen table. Trump delivered squat in that regard and he is relevant in that he’s running for President, again. A good recession and he is in unless he shoots himself in the keister. I have no issues pointing out Biden’s failures, yes, he could have done better and Yellen is a PR disaster. But a Trump comparison is relevant since that seems to be the only other choice —- and he sucks.
Larry, This is probably the most bullshit that you have put in one of your posts in a long time. The cause of the downgrade was not due to spending, it was due to the Republican Congress not agreeing to raise the debt ceiling (just as the last time that our credit was downgraded). Bidenomics has put more money into the pockets of the working class than anything that the Republicans have tried in the last 20 years. Constant tax decreases have done nothing but exacerbate the inequality between the rich and poor, and the fact that you can’t see that shows that you are indeed a fool (but the fact that you have voted for a man to be President that has zero morals twice shows that already!) There was no need to have tax cuts during W’s time in office, and there certainly was no benefit to having tax cuts during the Trump regime. Neither of those cuts did anything to improve the economy-the only thing they have done is increase the deficit. Disgusting that you try to put the blame on this issue on the democrats, when the blame falls squarely on the idiots that are controlling the Republican House (and of course the Republican idiots in the Senate-most pointedly Tommy Tuberville who is holding our military at risk for nonsense!). You really have shown what a partisan hack you really are with this post!
Mike f … I would say that this is the most ignorant and partisan post that you have submitted in a long time, but the competition is too great to make such an assessment. Your claim that Biden has put more money in the hands of people is simply not true — although he has spend a lot trying to bribe voters. Most folks give Trump a better rating for handling the economy. And wage gains have been wiped out for most folks by the Biden inflation. Political hack? LOL. I have often written criticism of Trump — personality and some policies — and Republicans in Congress. That is called objectivity. You have never said a positive word about Trump or Republicans. And you call me a “political hack.” Look up the word “projection.”
Larry, At least you didn’t even attempt to refute the cause of the credit downgrade. Credit is downgraded when the people doing the rating don’t think the people doing the borrowing (in this case the US) will pay back their loans. Clearly this is directly attributable to the idiots in congress (who you routinely support) arguing whether we will pay our bills (raising the debt limit). Of course having a candidate on the Republican side (the leading candidate) who argues that bankruptcy is okay certainly doesn’t help matters. Your dementia is getting so bad, I think you would be well-advised to stop embarrassing yourself and give up these writing gigs. I realize you need the money due to the inflation that desantis has brought to florida, but I am sure you could find a nice home back In Illinois where you could receive the care you so desperately need for your mental condition…
Mike f … You certainly get nasty as well as stupid when you get shown up. You apparently do not have the knowledge and the experience to deal with serious dialogue or debate on these subjects — sooooo, you resort to the most ignorant, asinine and childish insults. You come across as a angry old man who has nothing left but to lash out with idiotic insults I am a writing by avocation — but I do get paid. On the other hand, I doubt you could ever get paid for your writing.
Here’s how I see the economy:
From Barrons: “The economic record, for both, is mixed. Trump inherited a healthy economy from former President Barack Obama that was eight years past the 2007-09 economic downturn, and steadily expanding. In the period under study, job growth chugged along and inflation was tame. But wages were flat, and increases in the gross domestic product and job creation were more or less a continuation of trends that began in the Obama years, rather than a direct result of any changes that Trump made.
Trump had one major legislative victory in his early years: a suite of tax cuts on companies and individuals passed in 2017. The measures helped boost the stock market and fueled investment and demand, but also drove up the size of the U.S. debt.
Biden took office as the economy was still recovering from the Covid pandemic shutdowns, and the steady flow of stimulus aid passed under both his watch and Trump’s fueled a major spending boom. That helped job growth soar to record levels in each of the past two years, but also drove up inflation and forced the Federal Reserve to begin rapidly tightening monetary policy—steps that could spark a recession in the months ahead. “
The keys word is “mixed.” Trump, boring economy, low gdp, massive tax cuts, financial heroin fix plus extra debt. Biden, more free money, extreme job growth post pandemic, extreme inflation as consumers unleash pandemic savings, tighten money supply, expect recession. While neither is good across the board, Biden’s is less fueled by free money while horribly catching the blunt end of that spear right in the inflation ass that pains all, but really hurts those living on fixed income or living from paycheck to paycheck.
GDP:
Trump wildly misses his gdp growth target which was the PURPOSE of the TAX CUT. His plan failed and he covered with free money. Biden’s gdp growth is better but still sub-par from where we need to be, middle class better but still hurting and his free money was the tipping point for inflationary consumer spending.
“Biden has overseen a faster rate of growth, on average, than Trump. From the first quarter of 2021 to the first quarter of 2023, the most recent period for which data are available, economic growth under the Biden administration averaged 3.1% per quarter.”
Wall Street:
For the stock market, Trump saw incredible growth as people had no where else to invest, spending was done due to pandemic, and stock life was good. Trump got over 20% growth, Biden continues that but only over 8% to day with much choppiness as money tightens, further Fed money supply expected. Still ends up higher than Trump, but rate of growth is slowed under Biden,
Consumer Pricing:
For the CPI, Trump wins, hands down. This is the pain of Biden economics. Inflation. “That inflation, particularly in the form of high food costs, continues to dog the Biden presidency. Despite a historically strong labor market and significant wage increases, enduring high prices have suppressed consumer confidence and eroded Americans’ spending power.” Even if gone, it will be remembered. And it isn’t completely gone yet.
Interest:
For interest rates, Trump wins again. While rates did climb under Trump, the pandemic squashed them. Under Biden, inflation = Fed interest rate hikes to levels not seen since Bush/Obama crossover. They will not come down until inflation in check.
Jobs and Unemployment:
For jobs, Biden wins, hands down. For unemployment, it’s a tie, both have really low numbers except for the pandemic blip under Trump. Same with employment participation.
Wages:
For wages, Biden wins hands-down but it’s a hollow victory as inflation takes the profit out of wage increase. Economists expect all to revert post inflation; they are wrong unless the recession is fairly deep. With low unemployment, people are less likely to accept or be forced to take less wages.
Housing:
For housing prices, Biden when, but as to success, it depends. Prices continue to rise which is great for owners, not so much so for buyers.
Consumer Confidence:
For consumer confidence, and this may be the determining factor in the Horist supposition that “individuals have a bad feeling about this,” Trump wins until the pandemic, then he loses. Biden wins until inflation makes him a loser. The media talk of recession doom does not help nor Biden/Yellen’s false flags that everything gonna be alright. As Horist clumsily alludes to, individuals see inflationary prices, high interest rates, high housing prices (especially in DeSantisland), that are not covered by their pay increases, if they got em. They may have jobs, they may have money, but they are holding for a rainy day they feel is coming.
*https://www.barrons.com/articles/trump-vs-biden-economy-ec8ff89a* Enjoy the charts.
I will add a couple:
Personal savings:
The savings rate skyrocketed in the pandemic, now it’s half of normal, which means people are spending savings either because of inflation or enjoyment or both. Excess savings hit an all-time pandemic high in two stimulus peaks with most of the money saved by higher income folks like me who never touched their stimulus (I gave mine away in charity — take that Larry :>) until Q1 21 when it drained fueling inflation. Today we have a low not seen since 2014. We do not have too much money anymore at a personal level. If you were tight before the pandemic, you are tight again. And if your salary did not increase, you are hurting. But for the upper incomes, there’s too much money still, strange times and mixed economy.
*https://tradingeconomics.com/united-states/personal-savings#:~:text=Personal%20Savings%20in%20the%20United,percent%20in%20July%20of%202005.*
*https://fred.stlouisfed.org/series/PSAVE*
Debt:
Individuals have reacted to this, in the way Americans do, they borrow and US individual debt. This is probably where I come off the rails with Horist’s “ I think the people are the best judge of their own economic situation.” Apparently not given in the face of recession, with interest rates rising monthly, the “people” have borrowed at an unprecedented rate to keep up with the Jones: “American household debt hit a record $16.9 trillion at the end of 2022, up $2.75 trillion since 2019, according to the Federal Reserve. If you had to write that check it would read $16,960,000,000,000. *www.debt.org/faqs/americans-in-debt/demographics/*. The demographics of this are interesting too.
Summary:
Mixed is the key word in either Trump’s or Biden’s economy. Remember, wherever you are in the economy, you have never been there before, and while the past is useful, it is far from a future forecast. Recession is still very possible, we can hope for a light one, but IMO, it is still coming. If global, and it might be, that would be more concerning. Biden is spending, but not irresponsibly like Trump’s combined spending spree on top of massive tax cuts. Question is will they start to pay off before the recession hits. Much of recession is fueled by feelings and as Horist notes, many are not feeling economically good right now. The personal debt part, combined with lower savings, and lower savings rates —— it’s dicey.