The debt rating agency Fitch downgraded the country's debt rating on Tuesday. The U.S. debt rating was downgraded to the second highest rating, AA+, instead of AAA, its score until now.
The reason for this downgrade is due to the fiscal deterioration in the United States since the debt ceiling deadlock began in May. The decision was also made due to the government's ever-increasing debt, according to Fitch Ratings. The political stand-offs between the Biden administration and the House of Representatives made people concerned about the country's fiscal management, according to the agency. The problem does not stop there. According to Fitch, the country's fiscal management has steadily deteriorated over the last 20 years.
The Treasury Department was quick to react to Fitch's surprise re-rating. Secretary of Treasury Janet Yellen said, "Fitch's decision does not change what Americans, investors and people around the world already know: that Treasury securities are the preeminent safe and liquid asset and that the U.S. economy is fundamentally strong."
White House spokeswoman Karine Jean-Pierre also cleared the air, blaming the Trump administration directly for Fitch's negative re-rating. "The ratings model used by Fitch declined President Trump and then improved under President Biden, and it defies reality to downgrade the United States at a moment when President Biden has delivered the strongest recovery of any major economy in the world," Jean-Pierre said.
