Rep. Thomas Massie (R-Ky.) has warned that the passage of President Donald Trump's ‘One Big Beautiful Bill’ could tank the U.S. credit rating to BBB status, a level that historically signals financial distress.
What Happened: In an X post, Massie quipped, "BBB = our credit rating if this bill becomes law," using the hashtag #sassywithmassie to underscore his skepticism.
The legislation, a sweeping tax and spending package, is set for a Senate vote, with the Congressional Budget Office projecting an increase in the national debt over the next decade.
Massie's critique comes amid growing concerns over fiscal responsibility, following a rare downgrade of U.S. debt to Aa1 by Moody's on May 16, which cited rising deficits and inadequate spending cuts.
The One Big Beautiful Bill, championed by President Trump, includes tax cuts on Social Security income and tips, alongside Medicaid restrictions, but critics like Massie argue it fails to address core conservative priorities like deficit reduction or welfare reform for illegal immigrants.
According to a report by the University of Colorado, Nathalie Moyen, a finance professor at the Leeds School of Business, highlights that a credit downgrade could mean higher borrowing costs. Interest rates on loans, mortgages, and credit cards might rise as investors demand more return to offset perceived risk, directly hitting household budgets.
“Meanwhile, the U.S. government now faces higher interest payments on its own debt. Eventually, that pressure will likely lead to higher taxes or cuts in government spending, both of which will be felt by everyday Americans,” said Moyen.
Additionally, David Beahm, President & CEO of Blanchard and Company, explained to Yahoo Finance that the U.S. could be seen as a risky borrower after a downgrade, and “investors may demand higher interest rates in exchange for taking on what they see as greater risk in lending to the U.S.”
Why It Matters: The Congressional Budget Office's estimates on the distributional impacts of the One Big Beautiful Bill Act revealed that tax adjustments, including the extension of 2017 tax act provisions, would drive a $3.8 trillion rise in the federal deficit.
Additionally, the CBO report highlights a $698 billion cut in federal subsidies due to modifications in the Medicaid program, alongside a $267 billion reduction in federal outlays for the Supplemental Nutrition Assistance Program (SNAP).
The report further noted, “Household resources would decrease by an amount equal to about 2 percent of income in the lowest decile (tenth) of the income distribution in 2027 and 4 percent in 2033, mainly as a result of losses of in-kind transfers, such as Medicaid and SNAP.”
Conversely, household resources would grow by 4% for those in the highest decile in 2027 and 2% in 2033, primarily due to “reductions in the taxes they owe.”
Price Action: The SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust ETF QQQ, which track the S&P 500 index and Nasdaq 100 index, respectively, were trading higher in premarket on Monday. The SPY was up 0.45% at $617.65, while the QQQ advanced 0.70% to $551.95, according to Benzinga Pro data.
After hitting a fresh record on Friday, the futures of the S&P 500, Nasdaq 100, and Dow Jones indices were trading higher on Monday.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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