Moody’s strips U.S. government of top credit rating

Moody’s Ratings downgraded the U.S. government’s credit rating on Friday due to the failure of successive administrations to address the growing national debt. The downgrade from Aaa to Aa1 was attributed to the inability to control rising debt levels. Despite this, Moody’s acknowledged the U.S.’s strong economic fundamentals, such as its resilient economy and the global importance of the U.S. dollar. Moody’s is the latest of the three major credit rating agencies to lower the U.S. government’s credit rating, following similar actions by Standard & Poor’s in 2011 and Fitch Ratings in 2023. The agency predicted that federal deficits would continue to increase, driven by rising interest payments on debt, growing entitlement spending, and limited revenue generation. The extension of President Donald Trump’s tax cuts, favored by the Republican-controlled Congress, was identified as a factor contributing to the deficit. The political deadlock in Congress has hindered efforts to address the country’s substantial deficits, with Republicans opposing tax hikes and Democrats hesitant to reduce spending. Recent attempts by House Republicans to pass a significant tax and spending package were unsuccessful, with a group of conservative lawmakers pushing for deeper cuts in Medicaid and opposing President Joe Biden’s green energy tax incentives.