Moody's downgrades US credit rating over high deficit

Moody’s Ratings Service announced Friday that it was downgrading the United States' credit rating by one notch from Triple A to Aa1 based on an increase in the country's debt over the past decade.

The service in 2023 downgraded its outlook for the U.S. to "negative" from "stable," but did not change the overall rating.

The decision comes after the U.S. deficit for the current fiscal year hit $1.3 trillion last month, despite only being six months into the fiscal year, which began on October 1. 

“This one-notch downgrade on our 21-notch rating scale reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns,” the ratings agency said in a statement.

“Successive US administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs,” it continued. “We do not believe that material multi-year reductions in mandatory spending and deficits will result from current fiscal proposals under consideration.”

The downgrade comes the same day that the House Budget Committee failed to advance its legislative package that included extending the 2017 tax cuts. The package was blocked by a handful of Republicans and all Democrats.

Misty Severi is a news reporter for Just The News. You can follow her on X for more coverage.