CNN
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MOODY categories reduced US debt on Friday, stripping the last perfect credit rating. This step can disturb financial markets and raise interest rates, which may create an additional financial burden for Americans who are already suffering from customs tariffs and inflation.
Among the three main credit rating agencies, Moody's was the only only, kept her distinguished classification of US Dress AAA. Moody's has obtained an ideal credit rating for the United States since 1917.
It now classifies us as credit as one temperature below, in AA1, joined Fitch Ratses and S&P, which reduced their credit categories for American debt in 2023 and 2011, respectively.
Moody's said in a statement that the decision to reduce debt was affected by “the increase that exceeds a decade in government debt rates and pay benefits to levels of higher higher -classified kings.” Moving forward, MOODY said that he expects to continue to grow, and to weigh the American economy as a whole.
“The Trump administration and the Republicans are focusing on reforming Biden's chaos by reducing waste, fraud and abuse of government and passing a large and beautiful bill to restore our house in order,” White House spokesman Kush Disi said on Friday. “If Moody has any credibility, they will not remain silent because the financial catastrophe in the past four years has been revealed.”
A Treasury spokesman did not immediately respond to CNN.
Moody's initially put the United States in a possible reduction in November, while quoting the recent events that embody the exceptional political gap of America. This included the separation close to America last summer and the overthrow of Parliament Speaker Kevin McCarthy, which is the first time in history the spokesman was granted the shoe during a legislative session, and the inability of Congress to consolidate an alternative to weeks.
Moody's said that the United States is not an immediate risk of reducing its reduction again: The credit rating agency considers that American expectations are partially “stable” because of “its long history of very effective monetary policy led by an independent federal reserve.” However, President Donald Trump recently raised questions about whether he will continue to respect the independence of the central bank, and he previously threatened to shoot the Jerome Powell President.
AA1 is still very strong, although less of perfection. The Rating Agency noted that the US regime, although it is facing a challenge, gives Moody's confidence that the United States is still worth rating almost ideal credit, if not AAA.
“Stable expectations take into account the institutional features, including the constitutional chapter of the authorities between the three branches of the government that contribute to the effectiveness of politics over time and do not concern events for a short period. While these institutional arrangements can sometimes be tested, we expect to remain strong and fun,” MOODY said. ”
The credit rating agency said that increasing government revenues or reducing spending could redress AAA in America. Trump took the goal of the latter through the Ministry of Government Efficiency led by Elon Musk, which led to the demobilization of thousands of federal government workers and the abandonment of the United States Agency for International Development (the United States Agency for International Development).
However, it is not clear that such movements change the government's needs to borrow. Indeed, the country is approaching the deadline in the summer when the United States can pay its debts unless the borrowing limit is raised, according to the Treasury estimates.
At the same time, Trump is pushing Congress to pass a “beautiful draft law law.”
The package will deepen taxes deeply – which mainly makes the provisions of individual income tax for the tax of tax discounts and jobs in Trump for the year 2017, in addition to adding many temporary tax exemptions to fulfill the president's promises to a campaign.
It also calls for the historical cuts of the country's safety network – especially medical and food stamps – in an attempt to reduce spending.
However, the loss of tax revenues will continue to implement spending discounts. The package will add $ 3.3 trillion to the country's debts during the next decade, according to a preliminary estimate of the committee for the responsible federal budget.
The annual deficit will jump from $ 1.8 trillion in 2024 to $ 2.9 trillion by 2034, as the federal government will continue to spend more than it will be prepared in revenue.
The amplified deficit, the unique US debt ceiling mechanism and the political definition in its center of its discounts were the three main credit rating agencies.
In 2011, S&P was martyred “political ingenuity” and “American governance and policy -making became less stable, less effective and less predictable.” In 2023, Fitch warned of the “financial deterioration” of the United States, “the burden of the debts of the supreme and growing government, and the erosion of government.”
America was running an annual deficit of $ 1.3 trillion in 2011, a number that has since increased to $ 1.8 trillion last year.
However, Obama and Biden departments have criticized each of these decisions. In 2023, Yellen said the decision was “arbitrary and based on old data.”
Investors have always considered the debts of the United States the most safe havens, but to reduce Moody, along with Fitch's and S&P, suggests that he lost some of his luster.
The reduction is likely to lead to the high US cabinet revenues, as investors see more risks in lending to government.
American Treasury bonds-especially the US Treasury for 10 years-affect all types of debt, from the mortgage rate for the homes that the Americans buy to decades all over the world
This is a developing story and will be updated.
