Moody's downgrades U.S. outlook to negative due to budget deficits and political polarization.

• Moody's Investors Service changed its outlook on the United States' government from stable to negative, citing growing risks to the country's financial stability.
• The U.S. has been given a long-term issuer and senior unsecured ratings of Aaa by the ratings agency.
• Congress faces a government shutdown threat as Moody's cuts its outlook. The government is funded until next Friday.
• On Saturday, Mike Johnson, the newly elected House Speaker, intends to unveil a Republican plan for government funding.

On Friday, Moody's Investors Service changed its outlook on the United States' government from stable to negative, citing growing risks to the country's financial stability.

The U.S. has been given a long-term issuer and senior unsecured ratings of Aaa by the ratings agency.

The agency stated that if higher interest rates are implemented without fiscal policy measures to decrease government spending or increase revenues, Moody's anticipates that the US's fiscal deficits will remain large, negatively impacting debt affordability.

Moody's stated that brinkmanship in Washington has also been a contributing factor.

The ratings agency warned that the ongoing political polarization in the US Congress increases the likelihood that future governments will fail to agree on a fiscal plan to address the decline in debt affordability.

Moody's expects the US to maintain its exceptional economic strength and retain its Aaa rating, with further positive growth surprises potentially slowing the deterioration in debt affordability.

Although Moody's maintains the US's Aaa rating, we disagree with the shift to a negative outlook," said Deputy Secretary of the Treasury Wally Adeyemo in a statement. "The American economy is robust, and Treasury securities are the world's top safe and liquid assets.

Congress is at an impasse over a bill, which means the government may face another shutdown after November 17. Moody's has recently downgraded its outlook due to this uncertainty.

On Saturday, Mike Johnson (R-La.), the newly elected House Speaker, will release a Republican government funding plan, allowing members to read it before the expected Tuesday vote on the measure.

The plan to fund the government through Dec. 7 and Jan. 19 through a laddered continuing resolution (CR) has been rejected by the White House and the Democratic-controlled Senate.

Karine Jean-Pierre, the White House press secretary, stated that Moody's decision to alter the U.S. outlook is a result of the Congressional Republican Party's extremism and ineffectiveness.

In August, Fitch downgraded the U.S. long-term foreign currency issuer default rating from AAA to AA+, stating that it anticipated fiscal deterioration over the next three years, as well as a decline in governance and an increase in debt burden.

At the time, Fitch stated that the repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management.