The United States lost its last perfect credit rating Friday, as Moody’s downgrade over rising deficits and long-term fiscal risks threatens to shake financial markets and raise borrowing costs.
The agency said it did not see a real effort by the government to cut spending and that it expected the U.S.'s fiscal performance to deteriorate compared with other highly developed economies. It said the nation's long-term growth will be significantly hurt by tariffs and that it expects the U.S.'s federal debt burden to rise to about 134% of GDP by 2035.
Moody's was the last of the major credit agencies to maintain an AAA rating on the U.S. Standard & Poor's downgraded the U.S. in 2011 and Fitch followed suit in 2023.
The vote in the House Budget Committee came despite Trump's call for Republicans to "UNITE behind" the legislation. "We don't need 'GRANDSTANDERS' in the Republican Party. STOP TALKING, AND GET IT DONE!" he said in a social media post.
Five of 21 Republicans on the panel voted to block the measure, saying they would continue to withhold support unless Speaker Mike Johnson agreed to further cuts to the Medicaid healthcare program for lower-income Americans and the full repeal of green energy tax cuts implemented by Democrats.
The budget committee later said that it would reconvene in person for a rare Sunday night 10 p.m. EDT (0200 GMT Monday) session to reconsider the legislation. Approval would start the clock on a 72-hour waiting period before a measure could be considered on the floor, allowing a vote on passage to proceed late next week and meet Johnson's goal of passage before the May 26 Memorial Day holiday, according to a person familiar with the matter.
Representative Ralph Norman, one of the hardline conservatives who voted against the bill, defended his decision.
"This isn't a grandstand," the South Carolina Republican told reporters. "We'll compromise somewhere, but just not giving the farm."
Friday's defeat is likely a temporary setback for the measure in a Congress that is controlled by Trump's Republicans and so far has not rejected any of his legislative requests.
Republicans are divided between hardliners who view the package as their best chance to cut spending and more moderate Republicans from competitive districts, who have warned that deeper spending cuts to social safety net programs could jeopardize the 220-213 seat House Republican majority in the 2026 midterm elections.
House Budget Committee Chairman Jodey Arrington told lawmakers at the hearing that the legislation would deliver on a promise to voters who elected Trump and gave the party full control of Congress last November.
"I am confident we will get to a good place this weekend and have the votes to pass it out of Committee Sunday evening," the Texas Republican said in a statement following the vote.
