Moody’s Credit Rating agency downgraded the US sovereign credit rating yesterday, citing concerns about the nation’s escalating $36 trillion debt burden. This decision may complicate President Donald Trump’s efforts to implement tax cuts and could create waves in global markets.
Moody’s initially awarded the United States its pristine Triple-A rating in 1919 and is the last of the three major credit agencies to make this downgrade.
The downgrade by one notch to “Aa1” comes after a change in 2023 to the agency’s outlook on the sovereign, reflecting broader fiscal deficits and increased interest payments.
“Successive US administrations and Congress have failed to agree on measures to reverse the trend of significant annual fiscal deficits and rising interest costs,” Moody’s stated when altering its outlook on the US from “negative” to “stable.”
Stephen Moore, former senior economic advisor to Mr. Trump and an economist at the Heritage Foundation, labeled the move as “outrageous.”
“If a US-backed government bond isn’t a Triple-A asset, then what is?” he remarked.
In response to the downgrade, White House communications director Steven Cheung took to social media, criticizing Moody’s economist Mark Zandi.
He described Mr. Zandi as a political adversary of Mr. Trump.
Mr. Zandi serves as the chief economist at Moody’s Analytics, which operates independently from the credit ratings agency Moody’s.
Since returning to the White House on January 20, Mr. Trump has pledged to balance the budget, while his Treasury Secretary, Scott Bessent, has consistently stated that the current administration aims to reduce US government funding costs.
