WASHINGTON: Fitch on Tuesday downgraded the US top-notch credit rating by a step, citing an increasing federal debt burden and an “erosion of governance” that has manifested in debt limit standoffs.
The decision to downgrade the United States from AAA to AA+ sparked a strong rebuttal from the White House, with press secretary Karine Jean-Pierre saying it defied reality.
Yellen Criticizes Fitch
Janet Yellen, Treasury Secretary, said in a separate statement that she “strongly” disagreed with the agency as well, declaring the change “arbitrary and based on outdated data,” according to AFP.
It is the first such move by a leading rating company in more than a decade. A debt ceiling impasse in 2011 witnessed S&P lower the AAA rating of Washington, generating bipartisan outrage.
Fitch Ratings said on Tuesday that the rating downgrade of the US reflected the potential fiscal deterioration over the next 3 years, a growing and high general government debt burden, and the erosion of governance” relative to peers.
Yellen said the quantitative rating model of Fitch declined between 2018 and 2020, but it was only announcing its change now despite progress recorded in indicators.
She said that US Treasury securities remain a preeminent safe and liquid asset and that the US economy is fundamentally strong.
While the lifting of the debt ceiling was often routine, it has for several years become a contentious partisan issue.
