America's looming debt crisis

In May 2025, the credit ratings agency Moody's downgraded the US government's credit rating from AAA to AA1.

Moody's was alarmed about whether the US government has sufficient budget discipline. According to Moody's, rising budget deficits given higher spending commitments and "broadly flat" revenue are likely to see the US debt performance "deteriorate".

History supports Moody's assessment that "successive US administrations and Congress have failed to agree on measures to reverse the trend" of large US budget deficits and rising debt obligations.

Since January 1981 when Ronald Reagan began his first term in the White House, US government debt has been heading higher.

In the past 54 years, there has only been one brief window with President Bill Clinton (1993-2001) where federal public debt as a percentage of US nominal gross domestic product (GDP) actually declined given the benefit of budget surpluses.

The latest available data for 2024 suggest that US public debt now stands at 96% of GDP.

Hence for every US$100 of national income as measured by GDP, America's government debt obligations amount to US$96.2.