U.S. Credit Downgrade and Tax Bill Rejection Signal Fiscal Challenges!

On May 16, 2025, Moody's downgraded the US credit rating from Aaa to Aa1. This is a decision taken due to rising federal debt and budget deficits. Moody's estimates that US debt could reach 134% of GDP by 2035.

On the same day, Trump's tax bill was rejected in the House Budget Committee. Five Republicans opposed the bill, demanding tougher spending cuts such as Medicaid cuts and the elimination of green energy incentives.

These developments raise serious concerns about US fiscal sustainability and political cohesion. Moody's stated that current fiscal proposals will not reduce budget deficits in the long run.