On May 17, 2025, Moody's Investors Service downgraded the U.S. sovereign credit rating from AAA to Aa1, citing persistent fiscal deficits and rising interest costs. This move has sparked a split among Republicans in Congress. Some members dismiss the downgrade as politically motivated, while others view it as a call for more stringent spending cuts.
The downgrade coincided with internal GOP conflicts over President Donald Trump's proposed tax and budget bill, which aims to extend his 2017 tax cuts. Nonpartisan analysts estimate the legislation could significantly increase the federal debt, currently at $36.2 trillion.
The bill faced a setback when five House Republicans joined Democrats to block it in committee, citing concerns over insufficient spending cuts. Fiscal conservatives are pushing for measures like stricter Medicaid work requirements, though such proposals risk backlash within the party.
Speaker Mike Johnson is working to unite the slim Republican majority for a revised vote, aiming to balance tax cut extensions with spending reductions to address the growing debt burden.
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