Catching Up: Moody’s Downgrades U.S. Credit Rating Amid Rising Debt
The agency cited persistent and growing fiscal deficits, rising interest costs, and political dysfunction as core reasons for the move.
Photo: Angela Weiss/Agence France-Presse
Overview
Date: May 16, 2025
Topic: Moody’s Downgrades U.S. Credit Rating Amid Rising Debt and Partisan Gridlock
Summary: Moody’s Ratings downgraded the United States' credit rating from Aaa to Aa1, marking the loss of the nation’s last top-tier sovereign rating. The agency cited persistent and growing fiscal deficits, rising interest costs, and political dysfunction as core reasons for the move. The downgrade comes amid Republican efforts to pass a sweeping tax-and-spending bill that is projected to significantly increase the national debt. While Moody’s reaffirmed a stable outlook based on strong institutions and an independent Federal Reserve, the downgrade highlights investor concerns about unsustainable debt trends and policy uncertainty in Washington.
Sources
The New York Times: U.S. Downgraded by Moody’s as Trump Pushes Costly Tax Cuts
CNN: The United States just lost its last perfect credit rating
NBC News: Moody's downgrades United States credit rating on increase in government debt
The Washington Post: Moody’s downgrades U.S. credit as Congress considers bill that could add to deficits
Fox Business: Moody's downgrades US credit rating over rising debt
The Wall Street Journal: U.S. Loses Last Triple-A Credit Rating
Key Points
Moody’s downgraded the U.S. credit rating to Aa1 due to persistent structural deficits, growing interest payments, and a lack of credible fiscal reform.
All three major credit agencies (S&P, Fitch, and now Moody’s) have downgraded the U.S. in response to political dysfunction and fiscal deterioration.
The downgrade coincides with Congressional debate over President Trump’s “One Big Beautiful Bill,” which would extend 2017 tax cuts and increase the debt by an estimated $3–3.3 trillion over a decade.
Moody’s expects deficits to rise to 9% of GDP by 2035 and does not believe current proposals will materially reduce spending or borrowing needs.
Despite the downgrade, Moody’s assigned a stable outlook, citing strong institutions, the dollar’s global reserve status, and Fed independence.
Unique Highlights
The New York Times: Provided bond market context, noting a spike in 10- and 30-year Treasury yields and quoting market analysts about potential investor reaction.
CNN: Noted Moody’s historic AAA rating for the U.S. since 1917 and referenced Elon Musk’s role in downsizing USAID under the Department of Government Efficiency.
NBC News: Included specific figures from after-hours trading: a 3-basis-point rise in 10-year Treasury yields and performance of bond ETFs and the S&P 500 ETF.
The Washington Post: Drew a direct comparison to former UK Prime Minister Liz Truss’s market-disrupting fiscal policies and cited the Committee for a Responsible Federal Budget’s warning of an “America’s Truss Moment.”
Fox Business: Cited projections of the U.S. debt rising to 156% of GDP and quoted Jamie Dimon on recession risks, highlighting investor unease.
The Wall Street Journal: Emphasized long-term investor concerns about higher borrowing costs and quoted institutional investors on possible impacts on yields and economic sentiment.
Contrasting Details
CNN and Fox Business emphasized the downgrade’s broader consumer impact (borrowing costs), while NBC News downplayed immediate economic fallout, noting only modest asset price shifts.
The New York Times framed the downgrade as a rebuke of Republican fiscal proposals, while Fox Business and CNN focused more on cumulative bipartisan fiscal mismanagement.
The Washington Post reported bipartisan reactions, quoting both Democratic and Republican lawmakers, whereas Fox Business and CNN emphasized Trump’s push to pass the bill despite fiscal risks.
CNN and The Wall Street Journal highlighted Moody’s confidence in institutional resilience despite political turbulence, whereas The New York Times noted the agency's oblique concerns over political and constitutional stability.
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