The credit rating of the United States received a potentially costly downgrade on Friday, as the ratings firm Moody’s determined that the government’s rising debt levels stood to grow further if Republicans enact a package of new tax cuts.

The downgrade, to one notch below the highest triple-A rating, amounted to a repudiation of Washington, where President Trump only hours earlier had pushed his party to adopt a legislative package that might add trillions of dollars to the nation’s fiscal imbalance.

The downgrade from Moody’s means that each of the three major credit rating agencies no longer gives the United States its best rating. Fitch downgraded the United States in 2023, citing fiscal concerns, and Standard & Poor’s downgraded the country in 2011.

The new rating decrease could send ripple effects throughout the economy if it prompts investors to demand higher payments on bonds, which in turn could raise consumers’ borrowing costs. So far, though, past downgrades have proved largely symbolic, as the American government’s debt remains the bedrock of the global financial system.

Moody’s pointed to decades of gridlock and dysfunction in the nation’s capital. It found that Democrats and Republicans alike had failed to meaningfully curtail U.S. debt, which now towers above $36 trillion.

Nor had the U.S. government addressed myriad well-known, and long-term, financial challenges, Moody’s said, especially the rising costs and persistent underfunding of programs like Social Security and Medicare.

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