Moody’s Ratings Service on Friday said it is downgrading the U.S.’s creditworthiness in response to an increase in government debt over the past decade and rising interest payments, in a blow to the Trump administration that could push up borrowing costs. The downgrade, which puts the U.S. one notch below the highest credit rating, was “driven mainly by increased interest payments on debt, rising entitlement spending, and relatively low revenue generation,” it said.
Moody’s message: The fiscal outlook has not improved since the firm put the federal government on notice in November 2023 that it was at risk of losing its pristine reputation as a borrower. The announcement comes as Republicans are debating President Donald Trump’s “big, beautiful bill” that would extend 2017 tax cuts, with some hard-line conservatives fighting to limit the increase to federal spending deficits. “Successive U.S. administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs,” Moody’s said. “We do not believe that material multi-year reductions in mandatory spending and deficits will result from current fiscal proposals under consideration.”
Source: Politico
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