Moody’s Ratings stripped the US government of its top credit rating Friday, citing successive governments’ failure to stop a rising tide of debt.
The White House adopted an aggressive tone towards Moody’s on Friday after the downgrade, with communications director Steven Cheung singling out Moody’s economist, Mark Zandi, for criticism on social media.
Moody’s is the last of the three major rating agencies to lower the federal government’s credit. Standard & Poor’s downgraded federal debt in 2011 and Fitch Ratings followed in 2023.
In a statement, Moody’s said: “We expect federal deficits to widen, reaching nearly 9 per cent of (the US economy) by 2035, up from 6.4 per cent in 2024, driven mainly by increased interest payments on debt, rising entitlement spending, and relatively low revenue generation.’’
Extending Trump’s 2017 tax cuts, a priority of the Republican-controlled Congress, Moody’s said, would add US$4 trillion over the next decade to the federal primary deficit (which does not include interest payments).
