Moody's warns of failures in the US despite stability

NEW YORK (EFE) — Moody's yesterday lowered the United States' credit rating from "Aaa" to "Aa1" due to the increase in government debt and interest payments over the last decade, but improved its outlook, which it previously considered "negative," to "stable."

"Successive US administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and rising interest costs," Moody's , one of the leading rating agencies, said in a statement.

The news comes after a group of Republican lawmakers blocked progress on a controversial tax cut plan pushed by US President Donald Trump , which seeks to expand tax breaks from his first term (2017-2021) and include new tax cuts.

The United States remains at the high end of Moody's 21-rating scale, down one notch from "Aaa," the highest rating. The other two major rating agencies, Fitch and S&P, removed the country from the highest rating within their own systems years ago.

Moody's believes the proposals still "under consideration" will not materially reduce mandatory spending or deficits , and anticipates "larger deficits" over the next decade, as well as fiscal outcomes that "deteriorate" compared to other highly rated sovereign debt.

"If the 2017 Tax Cuts and Jobs Act (Trump's) is extended, which is our baseline scenario, that will add about $4 trillion to the primary federal fiscal deficit (excluding interest payments) over the next decade," the institution warns.

Regarding the "stable" outlook, it maintains that the US maintains "exceptional credit strengths such as the size, resilience, and dynamism of its economy and the role of the US dollar in the global foreign exchange reserve."