Reversing Moody’s judgment from last week to lower its outlook on U.S. debt, U.S. Treasury Secretary Janet Yellen stated on Monday that the country’s economy is robust and the Treasury market is secure and liquid.
She declared, “This is a decision I disagree with,” during a press conference held in San Francisco, California, following the conclusion of the APEC Finance Ministers’ Meeting.
The ratings agency downgraded the U.S. credit rating from “stable” to “negative” on Friday, citing significant budget deficits and decreased debt affordability.
Yellen recognized that if long-term interest rates continue to climb, it will be challenging to sustain debt. However, she pointed out that the Biden administration is “wholly committed to a credible and sustainable fiscal path,” emphasizing initiatives to lower the deficit and boost the Internal Revenue Service, which is responsible for collecting taxes.
In addition, Yellen urged House Republicans to take steps to prevent a potential partial government shutdown that may occur this coming weekend.
This year’s third budget impasse comes after a protracted conflict in the spring that almost drove the federal government into default.
“An unnecessary economic headwind in a moment when the U.S. economy is doing well and moving in the right direction,” according to Yellen, is the prospect of a government shutdown.
The U.S. Treasury said on Monday that the October federal budget deficit decreased by about 25% compared to the same month last year, as revenues reached a record high due to the inflow of overdue tax payments from areas affected by natural disasters.
According to data released this month, the fiscal 2023 deficit—which ended on September 30—was about $1.7 trillion, the most since the COVID-19 era.