Latest news with #Standard&Poor's
3 days ago
- Business
Maryland's Wes Moore says he's not running for president but high-profile stops keep chatter alive
ANNAPOLIS, Md. -- Maryland Gov. Wes Moore, often mentioned among Democrats as a potential presidential candidate, has been saying for months that he isn't running for the White House in 2028. That hasn't stopped persistent talk about his future political plans, especially when he continues to make appearances outside Maryland that raise his national profile. On Friday, he's traveling to speak at the Blue Palmetto Dinner in the early presidential primary state of South Carolina. When asked about 2028, though, the governor is clear. 'I'm not running,' Moore told The Associated Press in an interview Wednesday. He also said, when asked, that he isn't trying to get his name in the conversation for a potential vice presidential candidacy, either. The trip to South Carolina includes meetings with business prospects, Moore said. 'And people should get very used to me going all over the country bringing business back to Maryland, because that's exactly what I plan on doing as long as I'm the governor of the state,' Moore said after a dedication in Annapolis for a memorial to former Rep. Parren Mitchell, the state's first Black congressman. In the third year of his first term, Moore plans to run for reelection next year in heavily Democratic Maryland. He says being the state's governor during a challenging time has his full attention. That includes working to navigate the difficulties of dramatic federal downsizing under the Trump administration, which poses an outsized economic impact on Maryland. The state is home to a large number of federal workers toiling in the shadow of the nation's capital — about 256,000 Marylanders received a federal W-2 in 2021, representing about 8% of taxpayers, according to an analysis by the state's comptroller. Earlier this month, Maryland lost its triple-A bond rating from the Moody's economic rating agency. State officials had cited the rating for more than 50 years as a sign of strong fiscal stewardship that enabled the state to pay the lowest rates when it sells bonds to pay for infrastructure. Two other rating agencies, Standard & Poor's and Fitch, have recently affirmed the state's triple-A bond rating. Moore and other leading Democrats in the state blamed the Trump administration's downsizing for the Moody's downgrade. The governor just had the most challenging legislative session of his tenure. Facing a $3.3 billion budget deficit, he worked with the legislature, which is controlled by Democrats, to reach a balanced budget that included about $2 billion in spending cuts throughout state government and about $1.6 billion in new revenues through tax and fee increases. Most of the tax increases were imposed on high-income residents, including two new higher tax brackets for people who make more than $500,000 and a new 2% tax on capital gains for people with income over $350,000. The governor has said most Marylanders won't see a tax increase, and some will receive a modest tax cut. Still, Maryland Republicans have been pouncing on the tax increases — an issue sure to be raised often by the GOP's next nominee for governor. Moore, 46, is the state's first Black governor, and the only Black governor currently serving. He is the former CEO of the Robin Hood Foundation, an anti-poverty nonprofit. He also is a Rhodes scholar and a combat veteran who served in Afghanistan. The buzz around Moore has persisted since the bestselling author won Maryland's governorship in his first bid for public office in a landslide in 2022, after prevailing in a crowded Democratic primary that included former national party chairman and former U.S. Labor Secretary Tom Perez. In a state that is about 30% Black, Moore was recently criticized by the state's Legislative Black Caucus for vetoing a bill to study potential reparations for slavery. Moore said the idea has been studied enough and now is the time to 'focus on the work itself' of building a better economy for all. That includes narrowing the racial wealth gap, expanding homeownership, uplifting entrepreneurs of color and closing the foundational disparities that lead to inequality — from food insecurity to education. Democrats outnumber Republicans 2-1 in Maryland, making the state largely safe for Democratic incumbents. Still, former Republican Gov. Larry Hogan won the first of his two terms by campaigning heavily against tax increases approved during the tenure of his Democratic predecessor, prompting some to wonder if the popular Hogan might run for governor again. Maryland limits a governor to two consecutive terms, but a former two-term governor could seek another term after sitting out one.
Boston Globe
3 days ago
- Business
- Boston Globe
Maryland's Wes Moore says he's not running for president but high-profile stops keep chatter alive
'I'm not running,' Moore told The Associated Press in an interview Wednesday. He also said, when asked, that he isn't trying to get his name in the conversation for a potential vice presidential candidacy, either. The trip to South Carolina includes meetings with business prospects, Moore said. Advertisement 'And people should get very used to me going all over the country bringing business back to Maryland, because that's exactly what I plan on doing as long as I'm the governor of the state,' Moore said after a dedication in Annapolis for a memorial to former Rep. Parren Mitchell, the state's first Black congressman. Get Starting Point A guide through the most important stories of the morning, delivered Monday through Friday. Enter Email Sign Up In the third year of his first term, Moore plans to run for reelection next year in heavily Democratic Maryland. He says being the state's governor during a challenging time has his full attention. That includes working to navigate the difficulties of dramatic federal downsizing under the Trump administration, which poses an outsized economic impact on Maryland. The state is home to a large number of federal workers toiling in the shadow of the nation's capital — about 256,000 Marylanders received a federal W-2 in 2021, representing about 8% of taxpayers, according to an analysis by the state's comptroller. Advertisement Earlier this month, Maryland lost its triple-A bond rating from the Moody's economic rating agency. State officials had cited the rating for more than 50 years as a sign of strong fiscal stewardship that enabled the state to pay the lowest rates when it sells bonds to pay for infrastructure. Two other rating agencies, Standard & Poor's and Fitch, have recently affirmed the state's triple-A bond rating. Moore and other leading Democrats in the state blamed the Trump administration's downsizing for the Moody's downgrade. The governor just had the most challenging legislative session of his tenure. Facing a $3.3 billion budget deficit, he worked with the legislature, which is controlled by Democrats, to reach a balanced budget that included about $2 billion in spending cuts throughout state government and about $1.6 billion in new revenues through tax and fee increases. Most of the tax increases were imposed on high-income residents, including two new higher tax brackets for people who make more than $500,000 and a new 2% tax on capital gains for people with income over $350,000. The governor has said most Marylanders won't see a tax increase, and some will receive a modest tax cut. Still, Maryland Republicans have been pouncing on the tax increases — an issue sure to be raised often by the GOP's next nominee for governor. Moore, 46, is the state's first Black governor, and the only Black governor currently serving. He is the former CEO of the Robin Hood Foundation, an anti-poverty nonprofit. He also is a Rhodes scholar and a combat veteran who served in Afghanistan. Advertisement The buzz around Moore has persisted since the bestselling author won Maryland's governorship in his first bid for public office in a landslide in 2022, after prevailing in a crowded Democratic primary that included former national party chairman and former U.S. Labor Secretary Tom Perez. In a state that is about 30% Black, Moore was recently criticized by the state's Legislative Black Caucus for vetoing a bill to study potential reparations for slavery. Moore said the idea has been studied enough and now is the time to 'focus on the work itself' of building a better economy for all. That includes narrowing the racial wealth gap, expanding homeownership, uplifting entrepreneurs of color and closing the foundational disparities that lead to inequality — from food insecurity to education. Democrats outnumber Republicans 2-1 in Maryland, making the state largely safe for Democratic incumbents. Still, former Republican Gov. Larry Hogan won the first of his two terms by campaigning heavily against tax increases approved during the tenure of his Democratic predecessor, prompting some to wonder if the popular Hogan might run for governor again. Maryland limits a governor to two consecutive terms, but a former two-term governor could seek another term after sitting out one.
The Print
23-05-2025
- Business
- The Print
Moody's US credit rating downgrade may usher in a new era—waning investor interest in US govt bonds
The downgrade has pushed 10-year treasury yields closer to 4.5 percent and 30-year yields near 5 percent, reflecting heightened investor risk perception. The downgrade signals that the era in which the US could borrow unlimited amounts without experiencing higher interest costs and inflation, may be beginning to change. This is for the first time in over a century that the world's largest and most liquid bond market does not have the Aaa rating. While this may not have an immediate impact, investors will evaluate their appetite and confidence in US government bonds. Last week, Moody's Ratings downgraded the rating of the United States government to Aa1 from Aaa, citing concerns about its inability to arrest the growing pile of debt. With this downgrade, Moody's joined Standard & Poor's and Fitch Ratings in placing the US one notch below the top grade. S&P had downgraded the US back in 2011, while Fitch did so in 2023. Decline in fiscal metrics Moody's highlighted persistently large fiscal deficits in driving the US government's debt and interest burden as the prime justification for the ratings downgrade. Over the past decade, the US government's fiscal metrics have deteriorated considerably. While federal spending has increased, tax cuts have reduced government revenue. As an outcome, deficits and debt have grown, and interest payments on government debt have shown a sharp increase. The decline in revenue is mainly on account of the Tax Cuts and Jobs Act, signed into law in December 2017 during Donald Trump's first term as president. The Act lowered most individual income tax rates, reducing the top marginal rate from 39.6 percent to 37 percent, and adjusted income thresholds for all brackets. The provisions of the Act lowered the corporate income tax rate from 35 percent to 21 percent. Most individual income tax provisions are set to expire on 31 December, 2025. Moody's opines that if the provisions of the Act are extended beyond 2025, it will add USD 4 trillion to the primary federal deficit. The federal fiscal deficit will rise to nearly 9 percent of the gross domestic product by 2035, up from the current levels of 7.6 percent, due to increased interest payments on debt, and relatively low revenue generation. Further, the debt burden is expected to rise to about 134 percent of GDP by 2035 from the present levels of 124 percent. Notably, the US debt affordability, expressed as the ratio of interest payments to revenues, is facing challenges due to rising interest payments and increasing debt burden. Despite demand, US treasury yields have seen an increase since 2021. While higher debt and deficits have led to higher interest payments and costs, the current administration's policy towards tariffs will exacerbate the situation by putting pressure on prices and making it difficult for the Federal Reserve to cut rates, driving up borrowing costs. Also Read: UK FTA is good news for India amid global turbulence. Domestic reforms must follow market access Previous instances of ratings downgrade The previous two instances of downgrade followed political standoff in US Congress over raising the federal debt ceiling, with significant disagreement between Republicans and Democrats on how to address fiscal challenges. While Republicans reject tax increases, Democrats are reluctant towards spending cuts. The downgrades were also in response to the failure of successive administrations to reverse the trends of large deficits and growing interest costs. The 2011 downgrade by S&P did not trigger a spike in US treasury securities. In fact, it led to a sharp rally in US bonds due to the flight-to-safety effect. But the 2023 credit rating downgrade by Fitch reflected deepening concerns over rising debt and long-term fiscal challenges. While the immediate market impact was limited, the 2023 downgrade signaled to global investors that the US government's financial management and political stability were under increasing scrutiny. The recent Moody's downgrade has further reiterated concerns over the government's fiscal challenges. Previous episodes of downgrade led to dollar strengthening, while emerging market currencies weakened. This time, the dollar could weaken, given the concerns on fiscal sustainability. Since 21 January, 2025, the US Treasury has been employing extraordinary measures to ensure that the government does not hit the USD 36.1 trillion debt ceiling. According to the Treasury's assessments, the extraordinary measures can last till August. Before reaching the August 'X' date, policymakers will need to agree to either raise or suspend the debt ceiling to avoid a default. The passing of Trump's new tax bill or higher borrowings could upend the calculations of the 'X date', and further complicate the task of fiscal management. Impact on emerging markets Emerging markets, including India, may face FPI withdrawals, if US yields rise sharply. The yield difference between US and Indian government bonds has been narrowing, and is expected to shrink more after the Moody's downgrade. The differential could narrow further, given that the Reserve Bank of India is widely expected to cut rates due to benign inflation. Thus, the rating downgrade and the US policy preference towards higher tariffs would subject emerging markets to bouts of volatile capital flows. Emerging markets reliant on international debt markets may see higher borrowing costs as risk premiums rise. Countries already struggling with high debt-GDP ratios may face steeper yields on the new issuances. Radhika Pandey is associate professor and Madhur Mehta is a research fellow at the National Institute of Public Finance and Policy. Views are personal. Also Read: Waning trust in US dollar has spurred a rally in Asian currencies. Central banks may have to step in
Telegraph
20-05-2025
- Business
- Telegraph
Donald Trump is heading for his own Liz Truss moment
Nigel Farage was recently asked whether Donald Trump would prove to be 'chump or champion' with his tariffs blitz. His response was that it was too soon to tell, but even a Trump acolyte like the Reform leader would surely concede that the early signs are pretty woeful. The US president is erratic at the best of times but his trade war has been utterly indiscriminate. At times, the US administration's approach has resembled little more than a circus with Trump as the drunken ringleader utterly unfit to direct the show. Anticipating his next move is a fool's errand. Parallels with the chaos that characterised Liz Truss's fleeting few weeks as prime minister are unavoidable. Like Truss, Trump has been forced into a humiliating retreat after trying to face down the financial markets and suffering an emphatic defeat. And in much the same way that the spectre of Britain's shortest-serving leader still hangs over the UK economy nearly four years after her ejection, investor confidence remains desperately fragile despite America and China quickly agreeing to a truce on tariffs. Trump's real Truss moment may still be to come, however, as investor fears shift from a devastating trade war with Beijing to his plans for a new era of sweeping tax cuts that could tear a fresh hole in federal finances. The investment community's response was both swift and overwhelmingly negative to the approval of Trump's tax cuts bill by a key congressional committee on Sunday, following days of Republican infighting over spending cuts to Medicaid. Indeed, the backlash had begun on Friday afternoon courtesy of Moody's. Anticipating a breakthrough that would put Trump's 'big, beautiful bill' on the path to possible passage in the House of Representatives later this week, increasingly nervous analysts stripped the US of its prized top sovereign credit rating. The Trump administration's 'nothing to see here' response to the loss of a triple-A credit rating isn't remotely convincing. Ditto its lame attempts to lay the blame for this squarely at the door of Joe Biden on the same day that he was diagnosed with aggressive prostate cancer. Yes, as US treasury secretary Scott Bessent argued over the weekend, the downgrade is something of a lagging indicator of fiscal health. 'We didn't get here in the past 100 days. It's the Biden administration and the spending that we have seen over the past four years that we inherited,' he pleaded. Moody's was the last of the three major credit ratings agencies to reduce its assessment of the federal government's creditworthiness. Standard & Poor's made its first ever downgrade back in 2011, and Fitch Ratings followed suit in 2023. Meanwhile, Moody's itself attributed the move to 'the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns'. Bessent is being highly selective in his attempts to pin the blame on Biden – and he knows it. What the White House is less forthcoming about is that Trump's tax plans also played a major part in its decision with Moody's warning that the outlook for US finances was becoming bleaker. 'The US's fiscal performance is likely to deteriorate relative to its own past and compared to other highly rated sovereigns,' it said amid forecasts that Trump's massive tax and spending bill will add trillions to the federal debt over the coming years. Nor can Bessent blithely brush off the downgrade as inconsequential. A triple-A credit rating is the gold standard and regardless of the extent to which previous administrations are to blame, its removal is a damning indictment of Trump's reckless plans and one that is likely to prove hugely costly. Although the US still has one of the highest credit ratings in the world, the downgrade means that US government debt is now seen as higher risk, leaving Washington to confront the very real and immediate possibility that it will have to pay higher interest rates on future borrowing, further exacerbating its financial squeeze. The S&P 500 and the Nasdaq fell as much as 1.1pc and 1.4pc respectively at the start of trading on Monday. The US dollar meanwhile slid 0.9pc against a basket of its peers including the pound and the euro, but the most notable feature of the reaction from investors was in the bond markets. A sharp sell-off in US government debt pushed the yield on 30-year Treasuries above 5pc leaving long-term borrowing costs at their highest level since late 2023, compared to rates as low as 1.2pc just five years ago. Ten-year rates – the yield that Bessent insists he and Trump are most focused on as a gauge of America's economic health – are creeping back that way too. Pooja Kumra, at TD Securities, described the reaction as 'another warning for a US administration already on bond vigilante alert'. Markets are right to be nervous. America's national debt has been consistently rising over the past two decades, leaving borrowings at an eye-watering $36 trillion (£27 trillion), and the federal budget deficit sitting at close to $2 trillion a year – equivalent to more than 6pc of gross domestic product. Trump's plans to extend his 2017 Tax Cuts and Jobs Act will add $4 trillion to the deficit over the next decade, or nearly 9pc of GDP by 2035, Moody's calculates. At the same time, higher debt interest costs and low tax revenue will push US federal government debt to 134pc of GDP over the same period, a big jump up from 98pc last year. A 5pc yield on 30-year US government bonds is significant. As Deutsche Bank strategists point out, 'we are now reaching yield levels that previously seemed to trigger sensitivity from the US administration'. The last time they reached such heights, Trump announced a 90-day pause on reciprocal tariffs, acknowledging that it was because investors were getting 'yippy' and 'afraid' – proof he is capable of behaving rationally after all. As veteran asset manager Stephen Jen, of Eurizon SLJ Capital, has argued, it may be necessary to have a repeat of what happened to Truss 'to force everyone' in the White House 'to do the right thing' again. Having already been forced into one embarrassing about-turn, the question is whether Trump can afford to reverse course a second time. Ultimately, however, it may be that the US economy can't afford for him not to.
Yahoo
20-05-2025
- Business
- Yahoo
Moody's downgrade rattles stocks but not Republicans pushing Trump's 'big beautiful bill'
A Moody's downgrade of the US credit score reverberated through financial markets Monday and pushed down stocks, but the response from Republicans crafting a bill that could add trillions in new red ink was to immediately try to minimize the news. "There a lot of optimism in this economy, and the president disagrees with that assessment," White House press secretary Karoline Leavitt said Monday morning. Both the White House and its congressional allies have taken pains to appear unfazed by the development, with lawmakers even taking a step forward Sunday night on the package after Moody's directly cited the ongoing effort in its Friday statement that it had stripped the US government of its top AAA rating. The rating agency wrote that "if the 2017 Tax Cuts and Jobs Act is extended, which is our base case, it will add around $4 trillion to the deficit over the next decade," adding that the result could be a debt burden of 134% of GDP by 2035. "While we recognize the US' significant economic and financial strengths," Moody's added in a statement that noted the fiscal situation was the result of successive administrations, "we believe these no longer fully counterbalance the decline in fiscal metrics." Friday's move was the third major downgrade of US creditworthiness since 2011, after similar moves from Fitch in 2023 and Standard & Poor's in 2011. "There's something very different about this downgrade than the last two," said Harvard economist and professor Jason Furman, who was an economic adviser to President Obama, in a Yahoo Finance live appearance on Monday. He noted that early downgrades had been about government dysfunction and fears that Washington would be unable to wrestle with the debt situation. "This time, it's unified Republican control, and what Moody's is concerned about is what those unified Republicans will do," he said. "They are set on increasing the debt, with the only debate being by how much." Members of Trump's orbit brushed off the move using a variety of reasoning. Many of Trump's closest allies assigned political motives to Moody's move. The White House communications director reacted to the news over the weekend by attacking Mark Zandi — the chief economist of Moody's Analytics, which is not involved in ratings decisions — writing that "nobody takes his 'analysis' seriously." Treasury Secretary Scott Bessent and National Economic Council Director Kevin Hassett, meanwhile, tried to shift the blame to former President Biden. "Moody's is a lagging indicator," Bessent said Sunday on NBC, calling the downgrade about the Biden administration. Hassett echoed the assessment Monday on Fox Business, saying US Treasuries are "the safest bet on Earth." Both advisers have repeatedly brushed off questions about the fiscal impact of the current bill under consideration on Capitol Hill, as well as Trump's first-term record. Others in Trump's orbit tried to cast the bill as fiscally responsible, with Trump budget director Russell Vought saying that the bill "ends decades of fiscal futility" and will balance out because of "$2.5 trillion in assumed economic growth." But it's an assessment that few outside economists agree with. The tax pieces of the bill alone are set to cost over $3.8 trillion if enacted, according to Congress's Joint Committee on Taxation. That's split between $7.7 trillion in tax cuts and $3.9 trillion in tax-specific offsets. Once the entire bill is considered, it could see over $3.2 trillion in new red ink, according to an analysis from the Committee for a Responsible Federal Budget. And if many of the temporary but politically popular cuts are eventually extended, the costs could balloon to more than $5.2 trillion over the next decade, the group found. "It's not backward looking," Furman added Monday of Moody's, noting that "Congress is in the process right now of adding trillions of dollars to what is already a very high deficit." The move from Moody's also did little to slow progress on the bill, which includes trillions in additional costs beyond the extension of the 2017 Tax Cuts and Jobs Act that the ratings agency cited. The legislative effort got a boost on Sunday when it was advanced by the House Budget Committee. The effort had stalled on Friday, but conservative Republicans relented and voted "present" late Sunday night to allow the effort to continue, even as they said they would keep pushing for more changes. House Speaker Mike Johnson also reiterated Sunday that he was undeterred from his goal of passage in the House this week before the coming Memorial Day recess. "We are going to try and get this vote done by Thursday, that's my plan," he told reporters. It was part of an overall muted response in Washington. Tennessee Republican Rep. Mark Green was one of the few lawmakers to cite the news, posting Sunday that the downgrade was "yet another wake up call." Yet the staunch Trump ally and chair of the House Homeland Security Committee has signaled he will be a strong supporter of the package after overseeing a section of the bill focused on new border security spending. Green recently called the bill a "generational opportunity." Representatives for the congressman did not respond Monday morning to inquiries from Yahoo Finance about whether the Moody's move had changed Green's thinking on the overall package bill. Green is a member of the House Freedom Caucus, which said Sunday night the bill "does not yet meet the moment" as it pushes for more changes, especially on provisions that would spike deficits in the next few years (as politically popular spending kicks in quickly) while holding off on politically painful cuts until after Trump is scheduled to leave office. This post has been updated. Ben Werschkul is a Washington correspondent for Yahoo Finance. Click here for political news related to business and money policies that will shape tomorrow's stock prices Sign in to access your portfolio
