Moody’s Downgrade of U.S. Credit Rating: an Exercise in Theater

Moody’s recent downgrade of U.S. Treasury debt makes it unanimous. Earlier this month, it joined Standard & Poor’s, which issued its downgrade way back in 2011, and Fitch, which followed in 2023. All three major credit-rating agencies now agree: the U.S. Treasury no longer deserves their top rating. While the language accompanying each downgrade varies, the message is consistent: America’s ballooning debt is a serious problem, and Washington has no credible plan to address it.

The concern is well-founded. For years, federal budget policy has been profligate, posing real risks to the nation’s long-term prosperity and stability. Every American has a stake in demanding bold, corrective action from Congress and the White House. Nonetheless, the downgrades themselves are financially meaningless.

Bond ratings are meant…