Moody’s is the last of the three major rating agencies to lower the federal government’s credit.
WASHINGTON — On Friday, Moody’s Ratings downgraded the United States from its highest credit rating, pointing to the inability of successive administrations to curb increasing debt levels.
The credit rating was reduced from the prestigious Aaa to Aa1, but Moody’s highlighted that the United States “continues to exhibit remarkable credit attributes, including the vastness, resilience, and vigor of its economy, as well as the U.S. dollar’s status as the world’s reserve currency.”
This move by Moody’s means it is the last of the trio of major credit rating agencies to downgrade the federal government’s credit. Standard & Poor’s made a similar downgrade in 2011, followed by Fitch Ratings in 2023.
In a statement, Moody’s said: “We expect federal deficits to widen, reaching nearly 9% of GDP by 2035, up from 6.4% in 2024, driven mainly by increased interest payments on debt, rising entitlement spending, and relatively low revenue generation.”
Extending President Donald Trump’s 2017 tax cuts, a priority of the Republican- controlled Congress, Moody’s said, would add $4 trillion over the next decade to the federal primary deficit (which does not include interest payments).
A gridlocked political system has been unable to tackle America’s huge deficits. Republicans reject tax increases, and Democrats are reluctant to cut spending.
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