US Credit Rating Downgraded Over ‘Erosion of Governance’
Summary from AllSides News Team
A major credit agency downgraded its rating of U.S.-issued debt from AAA to AA+, citing an “erosion of governance” over the last 20 years.
Why the Change? Fitch Ratings, one of the “Big Three” credit rating agencies, explained its decision on Tuesday, saying, “repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management.” Fitch also cited the lack of “a medium-term fiscal framework,” as well as “successive debt increases” spurred by “tax cuts and new spending initiatives.” Treasury Secretary Janet Yellen downplayed the rating change, saying it was “arbitrary and based on outdated data”; recent economic data has led many economists to take a more optimistic outlook.
Key Quote: A senior director at Fitch told Reuters (Center bias), “You have the debt ceiling, you have Jan. 6. Clearly, if you look at polarization with both parties ... the Democrats have gone further left and Republicans further right, so the middle is kind of falling apart basically,” adding, “We don't fault one party or the other for the fiscal situation.”
How the Media Covered It: News coverage often cherry-picked parts of Fitch’s explanation to match partisan narratives. On Fox News (Right bias), O'Leary Ventures Chairman Kevin O'Leary attributed the downgrade to purported future deficit increases from the bipartisan CHIPS Act and the Democrat-led Inflation Reduction Act — which would place the blame on liberal Democrats. Coverage from the left, meanwhile, often highlighted Fitch’s citing of the Jan. 6 Capitol riot, which would place the blame on conservative Republicans.
Featured Coverage of this Story
From the RightBiden administration official blames Trump, Jan. 6 for Fitch AAA US downgrade
President Biden's administration is placing the blame for the United States' drop in credit rating on former President Donald Trump and the Jan. 6 riots.
Fitch announced Tuesday it has officially downgraded the United States' long-term foreign-currency issuer default rating to "AA+" from "AAA," saying the downgrade "reflects the expected fiscal deterioration" and the nation's heavy debt burden.
An administration official claimed to FOX Business on Wednesday that the underlying model was AAA until former President Donald Trump's administration.
The administration official claimed the model dipped in the Trump-era and despite efforts since...
From the LeftFitch downgrades US debt on debt ceiling drama and Jan. 6 insurrection
Fitch Ratings downgraded its US debt rating on Tuesday from the highest AAA rating to AA+, citing “a steady deterioration in standards of governance.”
The downgrade comes after lawmakers negotiated up until the last minute on a debt ceiling deal earlier this year, risking the nation’s first default. But the January 6 insurrection was also a major contributing factor.
In a meeting with Biden administration officials, representatives from Fitch Ratings repeatedly highlighted the January 6th insurrection as a significant concern as it relates to US governance, a person familiar with the matter told...
From the CenterFitch downgrades US credit rating from AAA to AA+
The US government's credit rating has been downgraded following concerns over the state of the country's finances and its debt burden.
Fitch, one of three major independent agencies that assess creditworthiness, cut the rating from the top level of AAA to a notch lower at AA+.
Fitch said it had noted a "steady deterioration" in governance over the last 20 years.
US Treasury Secretary Janet Yellen called the downgrade "arbitrary".
It was based on "outdated data" from the period 2018 to 2020, she said.
Investors use credit ratings as a...