The United States just lost its last perfect credit rating. Moody’s has downgraded the U.S. due to ballooning debt, rising interest costs, and lack of political will to rein in spending.
Key Facts:
- Moody’s downgraded the U.S. credit rating from Aaa to Aa1 on Friday.
- The agency cited rising debt levels and interest payments as key reasons.
- It also said current proposals in Congress are unlikely to cut long-term deficits.
- The outlook was changed from “negative” to “stable,” reflecting balanced risks.
- This marks the last of the big three agencies to drop the U.S. from its top tier.
The Rest of The Story:
Moody’s Investors Service downgraded the U.S. credit rating one notch due to persistent fiscal deficits and rising interest payments on the national debt.
This decision drops the U.S. from its top-tier “Aaa” status for the first time in Moody’s history, placing the nation at “Aa1.”
The firm warned that entitlement costs for programs like Social Security and Medicare will keep rising as the population ages.
Meanwhile, revenue growth is expected to remain flat, causing debt and interest payments to continue climbing.
Although Moody’s acknowledged the strength of the U.S. economy and the dollar’s role as the global reserve currency, it believes the fiscal path is clearly worsening.
Moody’s downgrade follows similar moves by Fitch in 2023 and S&P in 2011.
All three major agencies now rate the U.S. below their highest tier due to concerns about long-term debt sustainability and political dysfunction in Washington.
Translation – our TRILLION DOLLAR debt interest payments are about to get even more expensive. It’s already more than we spend on our national defense each year!
The ONLY way to solve this crisis is to balance our budget. Period. https://t.co/3vWkFLWfVm
— Rick Scott (@SenRickScott) May 16, 2025
Commentary:
This is not just a symbolic blow. It’s a loud wake-up call.
The U.S. is over $36.8 trillion in debt—more than $323,000 per taxpayer.
That number isn’t shrinking. It’s exploding.
Even worse, interest payments on the debt are now larger than our national defense budget.
The US Government now spends more money on interest payments on the National Debt ($1.11 Trillion) than it does on National Defense ($1.10 Trillion).https://t.co/rQuXrxVpWs pic.twitter.com/a2r7Yk18n3
— Charlie Bilello (@charliebilello) May 6, 2025
Washington’s addiction to spending is out of control.
Neither party has been willing to make the hard choices needed to restore fiscal sanity.
Moody’s clearly doesn’t believe any current proposal in Congress will lead to meaningful, multi-year spending cuts.
That’s a damning indictment of our leadership.
While the Trump administration has tried to boost revenue through tariffs, any gains are likely to be swallowed up by continued huge spending.
A strong economy can’t outrun irresponsible policy forever.
We’re seeing the consequences now: downgraded credit, higher borrowing costs, and declining investor confidence.
A downgrade might seem technical, but it has real-world consequences.
It means America will pay more to borrow money.
That affects everything—from mortgages and credit cards to government programs.
It also signals to the world that the U.S. might not be the safe bet it once was.
The long-term outlook is grim unless the federal government gets serious about entitlement reform, curbs spending, and starts prioritizing debt reduction.
If they don’t, we won’t just be looking at another downgrade—we’ll be looking at a financial collapse that no country, no matter how powerful, can avoid.
The Bottom Line:
Moody’s downgrade of the U.S. credit rating is a serious warning.
With debt skyrocketing and no credible plan to rein it in, the U.S. is digging itself into a deeper fiscal hole.
The interest on that debt is already outpacing critical spending like defense.
If Washington doesn’t act soon, the cost of doing nothing will be devastating.
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