Moody’s has downgraded the U.S. credit rating for the first time in history, stripping America of its last perfect score as government debt continues to spiral out of control with no solution in sight.

At a Glance

• Moody’s downgraded the U.S. credit rating from Aaa to Aa1, removing America’s last perfect rating among major credit agencies
• The downgrade reflects decades of fiscal deterioration, ballooning interest payments, and political deadlock preventing deficit reduction
• Federal deficits are projected to grow from 6.4% of GDP in 2024 to 9% by 2035, with debt rising to 118% of GDP by 2035
• Despite the downgrade, Moody’s changed the U.S. outlook from negative to stable, citing economic strength and the dollar’s reserve currency status
• This follows similar downgrades by S&P in 2011 and Fitch in 2023 as America’s fiscal position continues to deteriorate

America Loses Its Last Perfect Credit Score

Moody’s Ratings officially downgraded the United States’ credit rating from the prestigious Aaa to Aa1 on Friday, removing America’s last perfect score among the three major credit rating agencies.

The downgrade comes after more than a decade of increasing government debt and interest payment ratios that have reached levels significantly higher than other similarly rated countries. This follows previous downgrades by Standard & Poor’s in 2011 and Fitch Ratings in 2023, completing the trifecta of major rating agencies that no longer view America’s credit as worthy of the highest possible rating.

The Moody’s announcement cited sustained rising debt, increasing interest payments, and a fundamental lack of political will to address chronic budget deficits as primary drivers of the decision.

The downgrade represents a significant milestone in America’s fiscal decline, as it marks the first time in U.S. history that none of the major credit rating agencies consider the country worthy of their top rating. This development raises concerns about potential long-term impacts on borrowing costs and America’s financial standing in global markets.

🚨CREDIT DOWNGRADE: The credit rating agency Moody’s downgraded the credit rating of the US government from “Aaa” to “Aa1,” specifically noting that they “do not believe that material multi-year reductions in mandatory spending and deficits will result from current fiscal… pic.twitter.com/wuqUI32bSv

— CRFB.org (@BudgetHawks) May 16, 2025

Debt Crisis Spans Multiple Administrations

Moody’s decision highlights what fiscal experts have warned about for years: America’s debt problem has been building across multiple administrations with neither party willing to make the difficult choices needed to reverse course. The credit agency pointed to evidence of steady deterioration in fiscal fundamentals that spans presidential administrations from both parties. This bipartisan fiscal failure has resulted in federal deficits projected to grow from 6.4% of GDP in 2024 to an alarming 9% by 2035.

“Successive U.S. administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs” , said Moody’s.

The Congressional Budget Office now projects federal debt to rise from 100% of GDP today to 118% by 2035. This trajectory is fueled by a perfect storm of financial challenges: ballooning entitlement spending as Baby Boomers retire, historically high interest payments on existing debt, and insufficient revenue generation. Moody’s assessment concluded that current policy proposals from both major political parties are insufficient to achieve meaningful deficit reduction in the foreseeable future.

Deficit and debt are existential issues. Moody's downgrades US credit rating citing rising debt
Article: https://t.co/uCGELTbOZO

The US has lost its last triple-A credit score from a major ratings firm after being downgraded by Moody's, which cited growing federal debt over… pic.twitter.com/VSrQzzlTxU

— Arts, Politics & Culture (@rosewdc) May 16, 2025

White House Pushes Back Against Downgrade

The Biden administration quickly contested Moody’s decision, attributing current fiscal challenges to pandemic spending and inflation rather than current policies. White House spokesperson Kush Desai defended the administration’s economic record while placing blame on previous COVID relief packages, despite the fact that the Biden administration added its own multi-trillion dollar spending bills to the national debt after taking office.

“Even Obama economists warned the Biden administration and congressional Democrats against recklessly wasting trillions on COVID ‘stimulus’ bills – spending that piled on our national debt, fueled runaway inflation, and forced the Fed to raise interest rates for everyday Americans”, said White House spokesperson Kush Desai.

Despite the downgrade, Moody’s did revise America’s outlook from negative to stable, acknowledging several strengths that continue to bolster the nation’s economic standing. These include the unmatched size and resilience of the U.S. economy, the dollar’s dominant role as the world’s primary reserve currency, and a strong track record of effective monetary policy led by the independent Federal Reserve. These factors help explain why U.S. Treasury bonds remain in high demand despite the mounting fiscal challenges.