On Friday, Moody’s Investors Service revised the nation’s debt outlook from stable to negative, citing increased risks to the country’s fiscal strength due to higher interest rates and escalating debt costs.
Although the United States still maintains its AAA rating, it is now closer to losing its perfect credit rating. This shift coincides with an upcoming deadline for Congress to fund the government and avert a shutdown.
Moody’s expressed concern that, in the face of higher interest rates, the absence of effective fiscal policy measures to reduce government spending or increase revenues would result in persistently large fiscal deficits, significantly undermining debt affordability.
The agency also highlighted the ongoing political polarization in the U.S. Congress, noting that this raises the risk of successive governments being unable to reach a consensus on a fiscal plan to address the decline in debt affordability.
The White House attributed the change to the GOP, with press secretary Karine Jean-Pierre stating, “Moody’s decision to alter the U.S. outlook is another consequence of Congressional Republican extremism and dysfunction.”
In recent months, both Fitch Ratings and S&P Global, the other two major ratings agencies, have downgraded U.S. creditworthiness amid the backdrop of threatened government shutdowns.
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