Moody's downgrades the U.S. for the first time on spending concerns

By Monica Showalter

Slow and pokey Moody's finally got around to handing the U.S. a debt downgrade, based on its unsustainable debt trajectory.

Holy. Shit.

*MOODY'S DOWNGRADES US CREDIT RATING FOR FIRST TIME IN HISTORY

They project US federal deficits will reach 9% of GDP inside the next decade.

The “Freedom Caucus” and fiscal hawks in Congress just got some big ammunition. pic.twitter.com/D9IpQ8PMDB
— Geiger Capital (@Geiger_Capital) May 16, 2025

Thanksalot, Joe Biden -- for leaving us with another mess to clean up.

Moody's has known about this a long time, so it's true its timing could have been the ratings agency's bid to Get Trump:

Moody's is now officially a political agency, not a credit rating agency. They downgraded America's credit rating from Triple A under Trump, but before, when Biden spent $5 trillion and sent inflation to 9% - no problem at all. Trump's pro-growth tax cuts make America richer… pic.twitter.com/nAN8Rq8Kuv
— Stephen Moore (@StephenMoore) May 16, 2025

And if it was not done when it should have been done, to protect big-spending Joe Biden, that's a disgrace.

All the same, it may just be that they are slow on the uptake:

Moody’s? The agency that had Lehman rated AAA two days before filing bankruptcy? pic.twitter.com/lIggwZeaMs

— Shake Pryzby (@ShakePryzby1) May 16, 2025

After all, the others -- Fitch and Standard & Poor's, had already pulled out of the station:

It's official:

For the first time in history, Moody's has downgraded the United States' credit rating.

Moody's cites concerns over soaring US debt levels with interest on US debt set to hit 30% of REVENUE by 2035.

What does it all mean? Let us explain.

(a thread) pic.twitter.com/5ICrXQRDCa
— The Kobeissi Letter (@KobeissiLetter) May 17, 2025

And Elon Musk and other fiscal hawks have been warning it's a problem for years, well before Musk asked President Trump to set up the DOGE office.

This same newsletter notes that the timing was peculiar -- on a late Friday in the wake of a budget vote, which fell short of passage because some Republicans wanted steeper cuts in spending:

What's also interesting about the timing of this release is that is came hours after Trump's budget bill was struck down.

Some Republicans voted against the bill, asking for STEEPER spending cuts.

This budget is estimated to add more than $2.5 trillion to the US deficit. pic.twitter.com/prBhJwGWsz
— The Kobeissi Letter (@KobeissiLetter) May 17, 2025

Perhaps it was a smoke signal to Congress to get its act together, and yes, side with the GOP fiscal minority that wanted to cut spending.

The bottom line is that the debt and overspending are real, the debt-to-GDP ratio is more than 100% of GDP, a bigger-than-wartime ratio and government spending amounts to 34% of GDP. That's right, the mighty American GDP is more than one third bureaucracy and crony shovelouts, none of which contribute to true economic growth.

The downgrade raises our government's cost of borrowing, and from there, its cost of servicing its debt:

Moody’s straight up telling you that you have clowns for politicians and they are ruining your credit rating.

Too bad it will take an actual economic catastrophe before the children in Washington grow up. pic.twitter.com/481epCdq4n
— Spencer Hakimian (@SpencerHakimian) May 17, 2025

Thanks a lot, senile Joe Biden. You've made us another pre-Milei Argentina, unable to achieve fiscal continence, the money rolling in and out.

Moody will keep downgrading our credit rating, as well they should. Here's my latest chart on our insane level of debt. Once the debt bubble bursts, it's game over. https://t.co/jg9qtvUAzl pic.twitter.com/f4s2DQgaBj
— Jon Gabriel (@exjon) May 16, 2025

Now that Moody’s has downgraded US credit, just a reminder that everything the government touches has increased in price over the last two decades

All this debt funded spending and yet our most critical necessities have become unaffordable to large portions of the population pic.twitter.com/bubl1Agp2X
— Boring_Business (@BoringBiz_) May 16, 2025

One can only hope that the U.S. Congress, long used to spending like a drunken sailor from both sides of the aisle, takes this as a wakeup call to cut the size of government -- or our ratings will look like those of a banana republic engaged in the same overspending practices. DOGE is our friend. Big-spending Congress members are the exact opposite.

Image: Logo, via Wikimedia Commons // public domain