Beautiful Virgin Islands

Wednesday, Jul 30, 2025

After 108 Years: Moody’s Downgrades U.S. Credit Rating

Moody’s has downgraded the United States’ credit rating from the highest level (AAA) to one notch below, Aa1. The reasons cited for the downgrade include weak fiscal management in Washington, massive deficits, and a sharp rise in interest payments on the national debt, which has reached approximately $36 trillion. For the first time in history, the United States no longer holds the highest credit rating from all three major agencies, after Fitch and S&P also issued downgrades in the past.

This marks the first time since 1917 that Moody’s has downgraded the U.S. credit rating. With this move, the world’s largest economy has lost its final perfect credit score, following similar steps taken by Fitch and Standard & Poor’s. It is the first time ever that none of the three major agencies assign the U.S. the highest rating—a move that could increase U.S. borrowing costs and affect the global economy. Moody’s released the announcement moments before Friday’s bond market close, so the full market reaction will only be seen when markets reopen.

Moody’s explained its decision by pointing to Washington’s weak fiscal discipline, enormous deficits, and a steep rise in interest payments on the government debt, which has surged to around $36 trillion this year. The report describes the American political system as paralyzed for at least the past decade and sees no substantial change coming from current policy proposals—especially not from former President Donald Trump’s tax package. Moody’s projects that by 2035, the federal debt will soar to 134% of GDP, up from 98% today.

Trump’s Tax Plan and the Growing Deficit

The downgrade comes amid a Republican push to pass what Trump has dubbed “the beautiful and big law”—a comprehensive legislative package that includes a permanent extension of his first-term tax cuts, additional tax benefits, and sweeping budget cuts in healthcare and welfare. According to the Congressional Budget Office, this would add at least $3.3 trillion to the deficit over the next decade. Although Republican leaders aim to offset some of the cost through cuts to support programs like Medicaid and food stamps, the budget gap is expected to widen.

White House spokesperson Kush Desai blamed Democrats and former President Joe Biden for the downgrade and “for wrecking the economy over the past four years.” He added, “If Moody’s had an ounce of credibility, it wouldn’t have stayed silent during the early stages of fiscal deterioration.” Meanwhile, Senate Democratic Leader Chuck Schumer argued the downgrade should be “a wake-up call for Republicans to stop chasing tax breaks for the ultra-wealthy.”

The White House also criticized economist Mark Zandi from Moody’s, despite the fact that he is not part of the unit responsible for credit ratings. White House spokesperson Steven Cheung called Zandi “a political enemy of Trump” and dismissed his analyses. “Zandi is an Obama advisor and a Clinton donor who has opposed Trump since 2016,” Cheung tweeted. “No one takes his ‘analyses’ seriously. He’s been proven wrong time and again.”

Economic Implications

In 2011, S&P was the first to downgrade the U.S. credit rating, following a fierce battle over the debt ceiling. Fitch followed in 2023. Moody’s had been “the last to hold faith” since 1917—and it has now chosen to downgrade the rating just as Trump returns to the political stage and seeks to revive his tax policies.

The economic impact of the downgrade could manifest in rising yields on U.S. government bonds, thereby increasing the cost of borrowing for the government and pushing up loan costs for the general public. Over the past month, the yield on the 10-year Treasury note has already risen by 0.3%, reaching 4.5%, while the 30-year yield has surpassed 5%. As U.S. bond yields rise, the effects are not confined to the U.S. alone. It influences the borrowing costs of governments worldwide, including Israel, and could trigger a global interest rate hike—harming global growth and emerging markets.

Moody’s Warning and Outlook

Moody’s specifically cited the independence of the Federal Reserve as a stabilizing factor but hinted that even this may not be guaranteed in the future. Trump has previously threatened to remove Fed Chair Jerome Powell, and there are concerns he could undermine the central bank’s independence if re-elected—a move that could shake market confidence.

Despite the downgrade, Moody’s affirmed the U.S. outlook remains “stable,” citing the strength of the economy, the U.S. dollar’s status as a global reserve currency, and the deep institutional trust embedded in the American system. However, the warning is clear: without concrete steps to reduce debt and deficits, the U.S. could face further downgrades—an outcome that could rattle markets and erode the standing of the world’s largest economy.

Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
Jeff Bezos hasn’t paid a dollar in taxes for decades. He makes billions and pays $0 in taxes, LEGALLY
China Increases Use of Exit Bans Amid Rising U.S. Tensions
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
Procter & Gamble to Raise U.S. Prices to Offset One‑Billion‑Dollar Tariff Cost
House Republicans Move to Defund OECD Over Global Tax Dispute
Botswana Seeks Controlling Stake in De Beers as Anglo American Prepares Exit
Trump Administration Proposes Repeal of Obama‑Era Endangerment Finding, Dismantling Regulatory Basis for CO₂ Emissions Limits
France Opens Criminal Investigation into X Over Algorithm Manipulation Allegations
A family has been arrested in the UK for displaying the British flag
Mel Gibson refuses to work with Robert De Niro, saying, "Keep that woke clown away from me."
Trump Steamrolls EU in Landmark Trade Win: US–EU Trade Deal Imposes 15% Tariff on European Imports
ChatGPT CEO Sam Altman says people share personal info with ChatGPT but don’t know chats can be used as court evidence in legal cases.
The British propaganda channel BBC News lies again.
Deputy attorney general's second day of meeting with Ghislaine Maxwell has concluded
Controversial March in Switzerland Features Men Dressed in Nazi Uniforms
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
Thai Civilian Death Toll Rises to 12 in Cambodian Cross-Border Attacks
TSUNAMI: Trump Just Crossed the Rubicon—And There’s No Turning Back
Over 120 Criminal Cases Dismissed in Boston Amid Public Defender Shortage
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
Trump Announces $550 Billion Japanese Investment and New Trade Agreements with Indonesia and the Philippines
US Treasury Secretary Calls for Institutional Review of Federal Reserve Amid AI‑Driven Growth Expectations
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Severe Flooding in South Korea Claims Lives Amid Ongoing Rescue Operations
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Japanese Prime Minister Vows to Stay After Coalition Loses Upper House Majority
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
CEO Resigns Amid Controversy Over Relationship with HR Executive
Man Dies After Being Pulled Into MRI Machine Due to Metal Chain in New York Clinic
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
US Revokes Visas of Brazilian Corrupted Judges Amid Fake Bolsonaro Investigation
U.S. Congress Approves Rescissions Act Cutting Federal Funding for NPR and PBS
North Korea Restricts Foreign Tourist Access to New Seaside Resort
Brazil's Supreme Court Imposes Radical Restrictions on Former President Bolsonaro
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Judge Criticizes DOJ Over Secrecy in Dropping Charges Against Gang Leader
Apple Closes $16.5 Billion Tax Dispute With Ireland
Von der Leyen Faces Setback Over €2 Trillion EU Budget Proposal
UK and Germany Collaborate on Global Military Equipment Sales
Trump Plans Over 10% Tariffs on African and Caribbean Nations
Flying Taxi CEO Reclaims Billionaire Status After Stock Surge
Epstein Files Deepen Republican Party Divide
Zuckerberg Faces $8 Billion Privacy Lawsuit From Meta Shareholders
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
SpaceX Nears $400 Billion Valuation With New Share Sale
Microsoft, US Lab to Use AI for Faster Nuclear Plant Licensing
×