Moody’s stripped the U.S. government of its highest credit rating, citing Washington fails to control its debt
Moody’s lowered the rating from gold standard AAA to AA1, but said the U.S. “retains excellent credit advantages such as the size, resilience and momentum of its economy, and the role of the U.S. dollar as a global reserve currency.””
Moody’s is the last of three major rating agencies to reduce the credibility of the federal government. S&P lowered federal debt in 2011 and Fitch in 2023.
“We expect the federal deficit to expand, with nearly 9% of the (U.S. economy) accounting for nearly 9% of the (U.S. economy) by 2035, up from 6.4% in 2024, mainly due to increased debt spending, increased due spending and relatively low income.
Moody’s said expanding President Donald Trump’s 2017 tax cuts, a priority for the Republican-controlled Congress, will add $4 trillion (excluding interest payments) over the next decade.
The deadlocked political system cannot solve the huge deficit in the United States. Republicans refuse to increase taxes, and Democrats are reluctant to cut spending. House Republicans failed to push for massive tax breaks and budget committee spending cuts Friday. A small group of tough Republican lawmakers insist on steeper cuts to Medicaid and President Joe Biden’s green energy tax breaks, and opposes all Democrats.
