Moody’s is sounding the alarm on U.S. debt and deficits, warning the nation’s AAA credit rating may soon be in jeopardy. Interest payments are set to explode, and spending cuts remain politically difficult.
Key Facts:
- Moody’s warns that U.S. fiscal strength is weakening due to ballooning deficits and debt.
- Interest payments on the national debt could rise to 30% of federal revenue by 2035, up from 9% in 2021.
- The U.S. debt-to-GDP ratio is projected to climb from nearly 100% in 2025 to 130% by 2035.
- Moody’s is the last major credit agency still rating U.S. debt at AAA, but its outlook is now negative.
- Efforts to cut spending face political resistance, especially over programs like Social Security and Medicare.
The Rest of The Story:
Moody’s released a new report Tuesday warning that the U.S. government’s debt and deficit trends are rapidly deteriorating.
The agency kept the country’s AAA credit rating but reaffirmed its negative outlook, citing massive annual deficits and rising interest payments as key concerns.
Moody’s also said the only thing keeping the U.S. at AAA is the strength of the dollar and the global dominance of the U.S. Treasury market — both of which could be put at risk if fiscal policy doesn’t improve.
Projections show debt service alone will consume nearly one-third of all federal revenue by 2035.
That level of spending could choke the government’s ability to fund anything else without drastic tax hikes or deep cuts.
Some efforts to cut waste, including those led by Elon Musk’s Department of Government Efficiency, have had limited impact so far.
Meanwhile, proposed tax cuts and tariffs could further widen the deficit unless paired with significant spending reforms.
New Moody's report on skyrocketing debt: federal interest payments will soar from consuming 9% of federal revenues in 2021 to 30% by 2035. https://t.co/RjrQ4cmH0n pic.twitter.com/C0w98tFUUT
— Chris Edwards (@CatoEdwards) March 25, 2025
Commentary:
This warning from Moody’s couldn’t be clearer: the U.S. is on an unsustainable fiscal path.
That’s exactly why the work being done by Elon Musk and the Department of Government Efficiency matters so much.
They’ve taken the fight to waste, fraud, and bloated bureaucracy — but that’s just the first step.
The truth is Congress and the White House need to move even faster.
We can’t rely on credit agencies or the global trust in the dollar to bail us out forever.
America is sitting on $36 trillion in debt — more than any nation in history.
We’ve only gotten away with it because the dollar is still the world’s reserve currency.
But what happens when that trust runs dry?
What if a Treasury auction fails?
What if no one wants our debt anymore?
The whole house of cards could collapse — fast.
The time to act isn’t next year, or after the next election.
It’s right now.
And that means massive spending cuts, real reform, and a renewed focus on protecting future generations from a full-blown economic crisis.
The Bottom Line:
Moody’s is sounding the alarm on U.S. debt and deficits, warning the nation’s AAA credit rating may soon be in jeopardy.
Interest payments are set to explode, and spending cuts remain politically difficult.
Efforts by Elon Musk’s DOGE initiative are steps in the right direction, but not enough.
Unless lawmakers act fast, the economic consequences could be severe and irreversible.
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