US Loses Top-Tier Credit Rating Amid Soaring Debt

The United States has been stripped of its final top-tier credit rating by Moody’s Investors Service, downgrading from Aaa to Aa1. This decision highlights concerns over ballooning government debt and persistent deficits, casting a shadow over President Donald Trump's economic narrative.

Impact on Trump’s Economic Agenda

The downgrade comes at a critical time as Trump’s proposed multi-trillion dollar tax and spending legislation faces hurdles in Congress, further complicating his economic agenda.

Historical Context and Future Projections

Following similar downgrades by S&P in 2011 and Fitch in 2023, Moody’s cited the US's increasing government debt and interest payment ratios as key factors. The agency projects federal deficits could rise to nearly 9% of GDP by 2035, with federal debt expected to reach 134% of GDP.

Political and Economic Repercussions

The White House has defended its fiscal policies, while critics, including Congressman French Hill, view the downgrade as a wake-up call to address the nation's fiscal challenges. Despite the downgrade, Moody’s acknowledges the US economy's resilience and the dollar's global reserve currency status.