Fitch Downgrades US Credit Rating
Facts
- Fitch Ratings on Tuesday announced it has downgraded the credit rating of the US one notch from AAA to AA+ over what it called “eroded confidence in fiscal management” after numerous political standoffs related to the debt ceiling.1
- Fitch also cited the possibility of a recession, an inability of lawmakers to reach a consensus on fiscal issues, and continued denial of the results of the 2020 presidential election as facets of its decision.2
- This downgrade comes two months after lawmakers spent weeks negotiating over whether to raise the debt limit, only to agree at the last minute before a default would have occurred.3
- Fitch previously flagged a potential downgrade in May, and then said it would make its decision after reviewing the third quarter of this year.4
- US Treasury Secretary Janet Yellen said that the downgrade was based on outdated information and she called the US economy “fundamentally strong.”5
Sources: 1USA Today, 2POLITICO, 3New York Times, 4Reuters, and 5NPR Online News.
Narratives
- Democratic narrative, as provided by MSNBC. The GOP is clearly to blame for this debt downgrade because of the debt ceiling and 2020 election embarrassments. Luckily, a similar downgrade didn’t dramatically harm the economy a decade ago, but if there's injury after this one, it will be the Republicans’ fault.
- Republican narrative, as provided by Red State. The Biden administration continues to refuse to take the blame for its reckless spending. Republicans — as members of the fiscally responsible party — certainly can’t be at fault for damaging Fitch’s confidence. Hopefully, Democrats will get the message when they'll be inevitably rejected in the next election.