Moody’s Credit Agency Lowers Outlook on US Credit Rating, House Republicans Aim to Avert Shutdown
House Republicans in the U.S. aim to release a stopgap measure to prevent a partial government shutdown in response to Moody’s credit agency lowering its outlook on the government’s credit ratings to “negative.” The release of the continuing resolution, or “CR,” is still uncertain, according to an anonymous source.
Mike Johnson, the U.S. House Speaker, has been engaged in discussions with members of the Republican majority regarding potential CR options. Agreement between the Republican-controlled House and Democratic-led Senate must be reached on a solution that President Joe Biden can sign into law before the current funding expires on November 17.
Moody’s decision to lower the credit outlook was influenced by political polarization in Congress, which raises concerns about Washington’s ability to reach an agreement to address the growing deficits and make them more manageable. The U.S. recorded a $1.7 trillion deficit last year, the largest since the peak of the COVID-19 pandemic, and rising interest rates will only increase the cost of servicing the debt.
Just a few months ago, Congress brought the U.S. perilously close to defaulting on its debt exceeding $31 trillion, a move that would have significantly impacted global financial markets.
As the potential shutdown looms, some Republicans advocate for a “clean” CR that would extend until mid-January without any spending cuts or controversial policy riders that Democrats oppose. However, hardline conservatives are pushing for a measure that includes spending cuts, tighter security at the U.S.-Mexico border, and an unconventional structure with staggered deadlines for different segments of the federal budget.
Lawmakers caution that a prolonged partisan battle over the stopgap measure could hinder Congress from averting a shutdown. While House Republicans debate their options, Senate Majority Leader Chuck Schumer has taken initial procedural steps towards advancing his own stopgap measure.
