The financial ratings firm lowered the U.S. credit rating from the gold-standard Aaa to Aa1. It said it expected federal deficits to widen, mostly due to increased interest payments on debt, rising entitlement spending and relatively low revenue generation.

The downgrade follows a change in the outlook on the sovereign in 2023 due to wider fiscal deficit and higher interest payments, and comes as Congress debates tax and spending plans that could deepen the fiscal hole.

The U.S. was stripped of its last top credit rating by Moody’s Ratings, reflecting deepening concern that ballooning debt and deficits will damage America’s standing as the preeminent destination for global capital and increase the government’s borrowing costs.