Moody’s Downgrades US Credit Rating For First Time In Over A Century Pressuring Trump Agenda

India-West News Desk

NEW YORK, NY – Moody’s has downgraded the U.S. sovereign credit rating, citing mounting concerns over the nation’s ballooning $36 trillion debt. The downgrade, announced on May 16, could complicate President Donald Trump’s efforts to extend tax cuts and risks sending shockwaves through global financial markets.

The downgrade marks the end of an era: Moody’s had maintained a pristine “Aaa” rating on the United States since first assigning it in 1919. It is the last of the three major credit rating agencies to lower its assessment of U.S. creditworthiness, following earlier cuts by Fitch and Standard & Poor’s.

Credit ratings serve as a benchmark for investors assessing the risk of lending to governments and corporations. A lower rating typically results in higher borrowing costs, reflecting greater perceived risk.

The rating was reduced by one notch to “Aa1”, a move that follows Moody’s decision in 2023 to revise its outlook on the U.S. from “stable” to “negative” due to concerns about rising interest payments and widening fiscal deficits.

“Successive US 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. Alongside the downgrade, the agency shifted its outlook on the U.S. back to “stable.”

The announcement sparked criticism from allies of President Trump. Stephen Moore, a former senior economic advisor to Trump and now an economist at the Heritage Foundation, called the move “outrageous.” “If a US-backed government bond isn’t a triple-A asset, then what is?” he told Reuters.

Since returning to the White House on January 20, Trump has pledged to balance the federal budget. However, his administration’s efforts to raise revenue and reduce spending have yet to reassure markets or rating agencies, the new agency said.

The Department of Government Efficiency, led by Elon Musk, has fallen far short of its cost-cutting goals, it said. Meanwhile, attempts to boost revenue through tariffs have contributed to market volatility.

Moody’s warned that the fiscal plans currently under discussion in Congress were unlikely to produce a “sustained, multi-year reduction in deficits.” The agency projected that the federal debt burden would climb from 98% of GDP in 2024 to roughly 134% by 2035.