America’s financial strength is deteriorating amid the increasing deficit, Moodyz warns

The financial power of the United States government is deteriorating as a larger direction Budget Moody classifications said in a report issued on Tuesday that the growing debts continue.

Moody’s said that US financial health has worsened at the time since it reduced its view of AAA credit rating in the country in November 2023. Fitch cut the American credit rating from AAA to AA+ in 2023 due to financial challenges and The maximum debt is ingenuityWhile Standard and the poor did this after the 2011 debt reduction crisis, which motivated the closure of the partial government.

The classification agency is the last main classification agencies to keep our sovereign debt at its upper level, AAA, although it took a more pessimistic look at government debts in 2023 due to the broader annual deficit and the highest interest payments on national debt.

“Even in the very positive and low economic and financial scenario, the ability to afford debt costs is still weaker than other kings made of AAA,” Moody’s wrote.

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The company is exposed to the percentage of public debt to gross domestic product (GDP), a measure that economists prefer in evaluating government debt in relation to the size of the economy, will rise from about 100 % in 2025 to about 130 % in 2035.

The ability to withstand debt costs is expected to increase at a faster rate, as interest payments represent 30 % of revenues by 2035 – a dramatic increase of 9 % in 2021.

The company explained that the low ability to afford US debt costs means that the central roles played by the dollar and the treasury market in the global financial markets have become more important in supporting the AAA classification.

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However, the changes in fiscal policy hold that view, as the Trump administration and the Republican in Congress follow a tax reduction package that extends Tax discounts for 2017 ends It can lead to more deficit if not compensated by significant spending discounts.

Moody’s said: “We see decreasing horizons that the strengths will continue to compensate for the financial deficit and a decrease in the ability to withstand debt costs.”

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The company said that the major discounts in spending will be difficult to implement due to the need to support the two parties, which will be subject to many pledges of Republican and Democratic politicians to leave compulsory spending programs such as Social security and medical care He did not touch her.

Other spending discounts, such as those that paid you Elon Musk For the Ministry of Governmental efficiency (DOGE), it has a simple effect on the budget compared to mandatory spending programs and is not likely to achieve great savings in the short term.

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In addition, the president Donald Trump Customs tariff plans can bring negative economic consequences.

Although definitions may raise revenues temporarily, if the tariff remains constantly in place over time, it is likely to be It hinders economic growthMoody’s said that facing its positive impact on revenues.

Reuters contributed to this report.