Moody's Downgrade Confirms Reckless Spending Is Gutting the US Economy Fast

The United States faces a looming economic catastrophe. A Deutsche Bank poll shows 80 percent of investors view our $36.2 trillion national debt as unsustainable, a concern underscored by Moody’s recent downgrade of our credit rating. This figure represents more than a number; it signals a crisis that could devastate our financial stability.

The Congressional Budget Office projects debt climbing to 118 percent of GDP by 2035, with annual deficits averaging over 6 percent of GDP. Interest payments are expected to surpass defense spending, draining resources from vital priorities. This path risks stifling investment, eliminating jobs, and fueling inflation, directly impacting families’ ability to make ends meet.

Washington’s refusal to confront this reality is alarming. Lawmakers continue to borrow recklessly, assuming the consequences can be deferred. History warns otherwise. The question remains: why do we allow this to persist?

Addressing this crisis requires decisive action. Federal spending must be cut, targeting inefficient programs and unsustainable entitlements. The House Freedom Caucus recently rejected a $3.8 trillion tax cut proposal, demanding corresponding reductions in spending. Their stance is principled, advocating for Medicaid reforms, the elimination of green energy credits, and strict caps on discretionary budgets.

Historical precedent supports this approach. In the 1920s, Treasury Secretary Andrew Mellon reduced federal outlays significantly, fostering economic growth under Calvin Coolidge. Today, organizations like the Cato Institute call for a deficit-neutral strategy, emphasizing the elimination of wasteful spending. This disciplined approach contrasts sharply with current policies that drive deficits higher.

Some propose increasing taxes on corporations and high earners to address the deficit. This solution is flawed. Higher taxes deter investment and weaken economic growth. According to the Yale Budget Lab, unchecked debt could lead to 1.2 million job losses by 2035. Raising taxes risks exacerbating these economic challenges, not resolving them.

International markets are sounding the alarm. Following Moody’s downgrade, global investors are retreating from U.S. Treasuries, wary of our persistent deficits. The 10-year term premium is rising, and foreign purchases of U.S. debt are declining. These trends reflect growing skepticism about America’s fiscal responsibility.

Bond markets are signaling distress. Yields on 30-year bonds have reached their highest levels since 2023, and volatility is increasing. Investors are demanding higher premiums, doubting Congress’s ability to enact meaningful deficit reduction. Treasury Secretary Scott Bessent’s commitment to maintaining 10-year yields at 4.44 percent appears insufficient to restore confidence in a faltering system.

Supporters of expanding Social Security, Medicare, and tax credits argue that these programs are essential for low- and middle-income families. They resist spending cuts, claiming they harm vulnerable populations. Yet, this perspective overlooks the unsustainable growth of entitlements, which drives our debt and threatens the very programs they aim to protect.

Their reliance on tax increases to fund these programs is equally problematic. The 1990 Budget Enforcement Act’s pay-as-you-go rules failed to control entitlement spending, proving that revenue alone cannot solve this crisis. Spending reform, not tax hikes, offers the only viable path to fiscal stability.

The urgency of this issue cannot be overstated. The Congressional Budget Office estimates that national debt will reach $37 trillion by September 2025. Rising interest costs will squeeze budgets, inflation will erode purchasing power, and families will face higher borrowing costs. These are not abstract risks; they are imminent threats.

With a fragile 220-213 House majority and debt ceiling negotiations looming in summer 2025, lawmakers must prioritize fiscal discipline. Investors, rating agencies, and historical lessons all point to the need for immediate action. Political posturing must give way to principled reforms.

America’s economic future hangs in the balance. By slashing spending and restoring fiscal sanity, we can protect our prosperity and ensure a stable legacy for generations to come.