Moody's Downgrade Confirms Reckless Spending Is Bankrupting America

The United States faces a reckoning. Moody’s Investors Service, a pillar of global finance, downgraded our credit rating from Aaa to Aa1, a move that underscores a national debt spiraling beyond $36 trillion. This isn’t a minor setback; it’s a warning of economic peril. With deficits climbing and interest costs surging, why are we still pretending everything’s fine?

Washington’s spending habits have pushed us to the brink. Annual deficits reached 6.4 percent of GDP in 2024, with projections nearing 9 percent by 2035. Interest payments, now over $800 billion yearly, drain resources from taxpayers. Fitch in 2023 and S&P in 2011 sounded similar alarms, yet the borrowing continues. The numbers demand action, not excuses.

Some claim the dollar’s role as the world’s reserve currency makes us untouchable. They argue we can borrow indefinitely without consequence. That’s a reckless bet. Global confidence in the dollar is slipping, with its share of reserves down to 58 percent in 2025. If we don’t address this debt, we risk our economy and our global influence.

The driving force behind this crisis is clear: entitlement programs. Social Security and Medicare, critical for many, face insolvency without reform. Trustees project their trust funds will run dry by 2035 and 2036, with long-term shortfalls of $25 trillion and $53 trillion, respectively. These programs aren’t sustainable as they stand, and delaying fixes only worsens the outcome.

Reform doesn’t mean abandoning retirees; it means saving these programs. Gradually raising the retirement age to 69 by 2035, means-testing Medicare for wealthier beneficiaries, and adjusting cost-of-living increases could save $4 trillion by 2050. These changes ensure fairness while securing the future, yet some resist, clinging to promises we can’t keep.

Others advocate taxing the rich to close the gap, proposing surcharges on incomes above $400,000 or new VAT systems. But higher taxes stifle growth, deter investment, and shrink opportunities. The Congressional Budget Office forecasts $2 trillion deficits in 2025. Revenue hikes won’t fix a system addicted to overspending.

Markets haven’t panicked over Moody’s downgrade, but don’t mistake calm for approval. Treasury yields rose 15 basis points after the announcement, a subtle but real shift. Investors still buy U.S. Treasuries, trusting the dollar’s global dominance. That trust, however, is fragile. Credit rating agencies like Moody’s influence borrowing costs worldwide, and their warnings carry weight.

The dollar’s reserve status is under strain. Its share of global reserves fell from 65 percent a decade ago to 58 percent in 2025. Analysts at Davos caution that persistent deficits and tariff policies could drive central banks toward alternatives like the euro. The IMF warns global debt could hit 100 percent of GDP by 2030, fueled partly by our fiscal policies. Our debt doesn’t just threaten us; it destabilizes the world.

Fixing this mess requires courage and clarity. The House Budget Committee’s plan to link debt-limit increases to nondefense spending caps sets a strong precedent. Limiting discretionary spending to 22 percent of GDP and reforming entitlements can curb debt growth while preserving essential services. A pro-growth tax system with lower rates and a broader base will fuel revenue through expansion, not penalties.

Past successes prove this works. Reagan’s 1980s reforms and the 1994 Contract with America prioritized spending cuts and growth, reducing deficits while boosting prosperity. The Heritage Foundation’s proposal to tie Social Security to longevity and cap debt at 100 percent of GDP by 2040 offers a practical path. These ideas reflect basic budgeting principles anyone would follow at home.

Time is running out. Our debt grows by $4.5 billion daily, and interest payments squeeze out priorities like defense and infrastructure. Acting now can restore Moody’s top rating and safeguard our economy. Delaying action invites a crisis that will hit every American where it hurts most.