Financial rating: the United States loses its AAA, the Fitch agency deplores the political crises

2023-08-02 12:33:34

This is a first for more than 10 years. The United States lost its precious AAA rating on Tuesday: the Fitch agency downgraded it by one notch to AA +, accusing in particular the repeated political crises over the debt ceiling of having eroded the country’s governance. .

Standard & Poor’s was the first to deprive the United States of “triple A” in 2011, and has not since raised the rating, which has remained at AA+. Only the Moody’s agency still assigns, at this stage, the best credit rating to the debt of the world’s largest economy.

“Repeated deadlocks on the debt ceiling”

Fitch justified its decision on Tuesday, in the first place, by the consequences of “repeated impasses on the debt ceiling”, stressing that these “political clashes (…) and last-minute resolutions have eroded confidence in budgetary management”. .

At regular intervals, the debt ceiling needs to be raised by Congress to keep the country from defaulting. This procedure has become the object of an intense and repeated political battle. Thus, at the beginning of June, the administration of Democratic President Joe Biden and the Republican opposition had reached an agreement in extremis.

Yet beyond this agreement, “there has been a steady deterioration in governance standards over the past 20 years, including in fiscal and debt matters,” Fitch lamented. “We strongly disapprove of this decision,” reacted White House spokeswoman Karine Jean-Pierre, accusing the administration of the previous President of the United States, Republican Donald Trump, of having led to a deterioration in the criteria. taken into account by Fitch in establishing its ratings.

Trump administration singled out by Democrats

“It flies in the face of reality to downgrade the United States at a time when President Biden has achieved the strongest recovery of any major economy in the world,” she added. In the sights of the Biden administration: Donald Trump’s tax reform in 2017, which reduced the taxes of the richest and those of companies.

Republicans, for their part, regularly accuse Democrats of reckless spending. Tax cuts, but also significant spending, were also singled out by Fitch in his decision, without however targeting any administration specifically.