By coinnews 
00:00 Speaker A
Treasury Secretary Scott Beson dismissed Moody’s downgrade of US credit as a lagging indicator in an interview with NBC on Sunday. Moody’s stripping the US of its last AAA credit rating Friday, pushing up yields and weighing on the dollar. So, what does the downgrade mean for the broader US economy? Joining me now, we’ve got Jason Furman. He’s a professor of practice at Harvard University, former CEA chairman under former President Obama. Uh Jason, it’s always great to speak with you. Thank you for being here this morning. Just break this down for me. What does a downgrade like this mean for the US economy, for consumers?
00:40 Jason Furman
Look, there’s no better understood security in the world than US Treasuries. So, no one needed this report um to learn anything. Um but it’s not um backward looking. Congress is in the process right now of adding trillions of dollars to what is already a very high deficit. The debt is on track to continue to rise um relative to the economy. And so, the fiscal situation really is quite serious even if we didn’t learn something new about it on Friday.
01:23 Speaker A
So, talk to me then if if the deficit situation is quite serious in your view, how serious is it? Can the US pay back its debts?
01:36 Jason Furman
Look, we can. Um we’re a large economy. You can roll it over, you can pay it down over time. Um but for a way to that to work, we need our debt falling as a share of GDP rather than rising as a share of GDP. In order to get there, um we’re going to need to make a meaningful adjustment and adjustment about the size of what we did in the early 1990s. Economically, that’s absolutely doable. Um politically is the much bigger challenge.
02:16 Speaker A
Yeah, and and obviously this downgrade coming as the House Budget Committee last night has approved Trump Trump’s tax bill. I’m curious from your perspective, is this downgrade sort of a direct warning to Washington about those tax plans, especially given Moody’s citing the fact that this tax plan could increase the deficit to 9% of GDP by 2035 when it’s currently at around 6%.
02:46 Jason Furman
Yeah. I mean, there’s something very different about this downgrade than the last two. Um the first one, S&P, was all fears that government dysfunction. We’d just gone through the debt limit. Um there was this question of whether political paralysis could lead you to not pay the debt back. Um this time, it’s unified Republican control and what Moody’s is concerned about is what those unified Republicans um will do. Right now, um they are set on increasing the debt with the only debate being uh by how much.