Moodys strips U.S. government of top credit rating, citing Washingtons failure to rein in debt

Published: Friday, May 16, 2025 at 9:55 pm

Moody's Downgrades US Credit Rating, Citing Debt Concerns

**Washington, D.C.** - Moody's Ratings has downgraded the United States government's credit rating, moving it from the coveted Aaa rating to Aa1. This decision, announced Friday, marks a significant development in the ongoing debate surrounding the nation's debt and fiscal responsibility. The agency cited the persistent failure of successive administrations to curb the growing national debt as the primary reason for the downgrade.

Despite the downgrade, Moody's acknowledged the enduring strengths of the U.S. economy, including its size, resilience, and dynamism, as well as the dollar's role as the global reserve currency. However, the agency expressed concerns about the trajectory of federal deficits. Moody's projects that deficits will widen, potentially reaching nearly 9% of the U.S. economy by 2035, up from 6.4% in 2024. This increase is primarily attributed to rising interest payments on existing debt, escalating entitlement spending, and relatively low revenue generation.

The report highlighted the potential impact of extending the 2017 tax cuts, a priority for Republicans in Congress, estimating it could add $4 trillion to the federal primary deficit over the next decade. The agency also pointed to the gridlocked political landscape as a contributing factor, with Republicans resisting tax increases and Democrats hesitant to implement significant spending cuts. This political impasse was evident on Friday, as House Republicans failed to pass a major package of tax breaks and spending cuts through the Budget Committee due to opposition from both hard-right Republicans and Democrats.

This downgrade makes Moody's the last of the three major credit rating agencies to lower the U.S. government's credit rating. Standard & Poor's downgraded U.S. debt in 2011, and Fitch Ratings followed suit in 2023.

BNN's Perspective: This downgrade is a serious wake-up call. While the U.S. economy remains strong, the persistent failure to address the growing national debt is concerning. Both parties need to find common ground on fiscal policy, including responsible spending cuts and potentially, revenue-generating measures, to ensure long-term economic stability. Ignoring this issue will only lead to further economic instability.

Keywords: US credit rating, Moody's downgrade, US debt, federal deficit, tax cuts, Republican, Democrat, fiscal policy, economy, credit rating agencies, Washington DC, government debt, economic outlook, national debt, budget committee

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