Moody’s Ratings downgraded the U.S. government’s credit rating from Aaa to Aa1 on Friday, stripping it of its top-tier status due to unchecked debt growth.

The agency, the last of the major three to maintain a triple-A rating for U.S. debt, cited “successive governments’ failure to stop a rising tide of debt,” projecting federal deficits to hit 9% of GDP by 2035, up from 6.4% in 2024. Key drivers include rising interest payments, entitlement spending, and low revenue, with President Donald Trump’s 2017 tax cuts, if extended, adding $4 trillion to the deficit over a decade.

Despite the downgrade, Moody’s noted the U.S. retains “exceptional credit strengths,” including its dynamic economy and the dollar’s global reserve status.

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The outlook shifted to stable from negative, reflecting confidence in U.S. monetary policy and governance, though political gridlock hampers fiscal reform. Standard & Poor’s (2011) and Fitch (2023) previously cut U.S. ratings to AA+.

The downgrade coincided with a House Budget Committee vote rejecting Trump’s tax and spending package, as hard-right Republicans, demanding deeper Medicaid and green energy cuts, allied with Democrats.

Federal debt is forecast to reach 134% of GDP by 2035, up from 98% in 2024, per Moody’s. Critics argue the downgrade may raise borrowing costs, with Treasury yields up 0.2% to 4.8% post-announcement, though some X posts dismiss it as symbolic, noting Aa1’s high-grade status.

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