Moody's Downgrades US Credit Rating Due to Rising Debt

Moody's, the renowned credit rating agency, has downgraded the United States' credit rating from Aaa to Aa1. The decision highlights concerns over the nation's growing debt and persistent fiscal deficits. This move marks the third major agency to strip the US of its top credit rating, following Fitch and Standard & Poor's in previous years.

The downgrade is attributed to the inability of successive US administrations and Congress to tackle the trend of large annual budget deficits and increasing interest costs. Moody's predicts that the federal deficit could swell to nearly 9% of GDP by 2035. Additionally, the agency warned that extending tax cuts could exacerbate the deficit further.

This decision has faced criticism, particularly from the White House, but serves as a reminder of the fiscal challenges the US faces. The downgrade could impact the cost of borrowing for the US government, leading to broader economic implications. While Moody's maintains a stable outlook, it cautions that further downgrades could occur if policy effectiveness and institutional strength continue to deteriorate.