On the 16th, international credit rating agency Moody's announced that due to the increase in the proportion of U.S. government debt and interest payments, the agency has decided to downgrade the U.S. sovereign credit rating from Aaa to Aa1, while adjusting the U.S. sovereign credit rating outlook from "negative" to "stable."
Moody's stated in a statement that successive U.S. governments and Congress have failed to agree on measures to reverse the trend of massive fiscal deficits and rising interest costs. Over the next decade, the U.S. fiscal deficit is expected to further expand. The continued massive fiscal deficit will exacerbate the government's debt and interest burden, and the U.S. fiscal situation may further deteriorate.
Moody's indicated that it adjusted the U.S. rating outlook from "negative" to "stable" because the U.S. still retains its credit advantages and the dollar's status as a global reserve currency. Despite some degree of policy uncertainty in recent months, it is expected that the U.S. will continue to implement efficient monetary policies under the independent leadership of the Federal Reserve in the long term.
According to Bloomberg reports, after Moody's downgraded the U.S. sovereign credit rating, the U.S. lost its last Aaa rating. Previously, Fitch and S&P Global, two of the three major international rating agencies, also downgraded the U.S. sovereign credit rating.
The report cited data from the Yale University Budget Laboratory pointing out that the Republican Party's tax plan could increase government debt by $3.4 trillion over the next decade. If the temporary provisions in related measures are extended until 2035, it could result in up to $5 trillion in government debt. If these provisions become permanent, by 2055, the government debt-to-GDP ratio in the United States could reach 200%.