Moody's Downgrades US Credit Rating Due To Government Debt Insolvency
Moody's Rating Agency just downgraded the Government of United States of America's (US) long-term issuer and senior unsecured ratings to AA1 from AAA and changed the outlook to stable from negative.
The one-notch cut comes more than a year after Moody’s changed its outlook on the US rating to negative, with Moody's joining Fitch Ratings and S&P Global Ratings in grading the world’s biggest economy below the top, triple-A position.
This one-notch downgrade on our 21-notch rating scale reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns.
“Successive US administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs. We do not believe that material multi-year reductions in mandatory spending and deficits will result from current fiscal proposals under consideration. Over the next decade, we expect larger deficits as entitlement spending rises while government revenue remains broadly flat. In turn, persistent, large fiscal deficits will drive the government's debt and interest burden higher.”
Over more than a decade, US federal debt has risen sharply due to continuous fiscal deficits. As deficits and debt have grown, and interest rates have risen, interest payments on government debt have increased markedly.
Some like to blame the 2017 Tax Cuts and Jobs Act, others like to blame Trump's tariffs and MAGA voters like to blame industrial outsourcing. However, the primary and root problem always was, and continues to be, the ever-expanding US national debt which has become economically unsustainable.
https://real.local/moodys-downgrades-usa-credit-rating-aaa
