Moody\u2019s cited rising debt, saying US had repeatedly failed to end the trend of large annual fiscal deficits and interest
\n Washington
\nMoody\u2019s Ratings has stripped the United States government of its top credit rating, citing successive governments\u2019 failure to stop a rising tide of debt, a surprise move that could complicate President Donald Trump\u2019s efforts to cut taxes and send ripples through global markets.
\nOn Friday, Moody\u2019s lowered the rating from a gold-standard Aaa to Aa1. \u201cSuccessive US administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs,\u201d it said as it changed its outlook on the US to \u201cstable\u201d from \u201cnegative\u201d.
\nBut, it added, the US \u201cretains exceptional credit strengths such as the size, resilience and dynamism of its economy and the role of the US dollar as global reserve currency.\u201d
\nMoody\u2019s is the last of the three major rating agencies to lower the federal government\u2019s credit rating. Standard & Poor\u2019s downgraded federal debt in 2011, and Fitch Ratings followed in 2023.
\nIn a statement, Moody\u2019s said, \u201cWe expect federal deficits to widen, reaching nearly 9 percent of [the US economy] by 2035, up from 6.4 percent in 2024, driven mainly by increased interest payments on debt, rising entitlement spending, and relatively low revenue generation.\u2019\u2019
\nExtending President Donald Trump\u2019s 2017 tax cuts, a priority of the Republican-controlled Congress, Moody\u2019s said, would add $4 trillion over the next decade to the federal primary deficit, which does not include interest payments.
\nWhite House communications director Steven Cheung reacted to the downgrade via a social media post, singling out Moody\u2019s economist, Mark Zandi, for criticism. He called Zandi a political opponent of Trump.
\n\u201cNobody takes his \u2018analysis\u2019 seriously. He has been proven wrong time and time again,\u201d Cheung said.
\nStephen Moore, former senior economic adviser to Trump and an economist at Heritage Foundation, called the move \u201coutrageous\u201d.
\n\u201cIf a US-backed government bond isn\u2019t triple A-asset, then what is?\u201d he told Reuters.
\nThe Department of the Treasury did not immediately respond to a request for comment from the Reuters news agency.
\nBond market rout concerns
\nA gridlocked political system has been unable to tackle the huge deficits that the US has accumulated. Republicans reject tax increases, and Democrats are reluctant to cut spending.
\nOn Friday, House Republicans failed to push a big package of tax breaks and spending cuts through the Budget Committee. A small group of hard-right Republican lawmakers, insisting on steeper cuts to Medicaid and President Joe Biden\u2019s green energy tax breaks, joined all Democrats in opposing it \u2013 a rare political setback for the Republican president.
\nSince his return to the White House on January 20, Trump has said he would balance the budget while his Treasury Secretary, Scott Bessent, has repeatedly said the current administration aims to lower US government funding costs.
\nTrump\u2019s attempts to cut spending through Elon Musk\u2019s Department of Government Efficiency have fallen far short of its initial goals. And attempts to raise revenue through tariffs have sparked concerns about a trade war and global slowdown, roiling markets.
\nLeft unchecked, such worries could trigger a bond market rout and hinder the administration\u2019s ability to pursue its agenda.
\nThe downgrade, which came after market close, sent yields on Treasury bonds higher, and analysts said it could give investors a pause when markets re-open for regular trading on Monday.
\n\u201cVery surprising. This is big \u2013 markets were not expecting this at all,\u201d said Tom di Galoma, managing director of rates and trading at Mischler Financial in Utah.<\/p>\n","protected":false},"excerpt":{"rendered":"
Moody\u2019s cited rising debt, saying US had repeatedly failed to end the trend of large annual fiscal deficits and interest Washington Moody\u2019s Ratings has stripped the United States government of its top credit rating, citing successive governments\u2019 failure to stop a rising tide of debt, a surprise move that could complicate President Donald Trump\u2019s efforts […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":{"0":"post-479228","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-sports"},"yoast_head":"\n