Moody’s warns about US finances
(MENAFN) Moody’s ratings agency has raised concerns about the United States' fiscal health, warning of a continued deterioration due to growing budget deficits and escalating debt. With the national debt surpassing $36 trillion and annual deficits exceeding $1.7 trillion, there are increasing worries about the government’s ability to meet its financial obligations.
The agency stated that the US fiscal strength is on a path of “continued multiyear decline,” noting that the situation has worsened since Moody’s issued a negative outlook on America’s AAA credit rating in November 2023.
While President Donald Trump has advocated for measures like tax cuts and tariffs to stabilize the nation's finances, Moody’s cautioned that implementing further tax cuts without substantial spending reductions could worsen the fiscal situation. The agency also highlighted the ongoing debate among Republicans over a proposed $4.5 trillion extension of tax cuts, which could require significant spending cuts that might clash with Trump’s promise to protect social programs.
Moody’s pointed out that the Department of Government Efficiency, led by Elon Musk, claims to have saved $115 billion in government spending. However, it noted that these cuts are minor compared to the country's mandatory spending commitments. Without meaningful policy changes, Moody’s projects that the US debt-to-GDP ratio could increase from the current 124% to about 130% by 2035, with interest payments potentially consuming 30% of federal revenue.
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