(Bloomberg) — The next US administration “must grapple with widening budget deficits,” warned Moody’s Ratings in a report published Tuesday, nearly a year after it announced a negative outlook for the country’s sovereign credit profile.
“The administration’s tax and spending policies will affect the size of future budget deficits and the expected decline in US fiscal strength, which could have a significant effect on the US sovereign credit profile,” analysts led by Claire Li and William Foster wrote in the report. “These debt dynamics would be increasingly unsustainable and inconsistent with a Aaa rating if no policy actions are taken to course correct.”
Last November, Moody’s lowered the US sovereign outlook to negative from stable while affirming the nation’s rating at Aaa, the highest investment-grade notch.
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