On Friday, Moody's downgraded the U.S. government's credit rating, citing repeated failures by administrations to control the country's growing debt, UNN writes, citing Newsweek.
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The agency lowered the rating from the highest level of Aaa to Aa1, noting that while the U.S. continues to benefit from key advantages such as a dynamic economy and the global dominance of the U.S. dollar, its fiscal outlook has deteriorated significantly.
This change means that the United States no longer has a fully stable top rating from any major agency for the first time in more than 100 years. Moody's becomes the third and final major credit agency to downgrade its assessment of the U.S. government's creditworthiness. Standard & Poor's downgraded the rating in 2011, and Fitch Ratings followed suit in 2023.
In its report, Moody's forecasts that the U.S. federal budget deficit will grow to nearly 9 percent of GDP by 2035, compared to 6.4 percent in 2024, driven by rising interest payments, rising social spending, and sluggish revenue growth.
Moody's also warned that extending U.S. President Donald Trump's 2017 tax cuts - now a key priority for the Republican-led Congress - would add $4 trillion to the federal budget's primary deficit over the next decade. Political deadlock remains a serious obstacle to fiscal reform: Republicans oppose tax increases, while Democrats oppose spending cuts, leaving little room for bipartisan solutions, the publication points out.