Fitch Ratings lowered the US government’s credit rating from AAA to AA+, citing inadequate governance and growing debt. Risk-based downgrading shows US government expense of lower FICO scores. 1000
For two years, Fitch Ratings has downgraded the US government due to “poor governance standards” and mounting federal, state, and municipal debt. On Tuesday, AAA was reduced to AA+, the highest predicted rating. Still risk-based. The report reveals how political division and Washington spending deadlocks cost Americans. Lower FICO scores damage the U.S. government over time.
Credit scores have only been lowered twice in the nation’s history. After government debt dispute, Standard & Poor’s downgraded the US to an estimated three A’s in 2011. Bad debt boosted loan amounts by $1.3 billion in 2011, according to a 2012 FBI report.
The massive U.S. economy and stable central government have kept expenses low. In economic crises, foreign investors buy US Treasuries, decreasing the government’s interest rate.
On May 24, Fitch cautioned that Congress’s credit-boosting actions might boost the government’s triple-A rating. Almost a week later, a compromise extended the prohibition and cut federal income by potentially to $1.5 trillion over the following decade.
Fitch blames political tensions for its decision. It observed “repeated debt limit deadlocks and last-minute goals” in the U.S. government.
The Biden administration condemned Fitch’s actions. According to Treasury Secretary Janet Yellen, it was “arbitrary” and “based on outdated data”.
Yellen said that the U.S. economy has recovered swiftly from the economic downturn, with the unemployment rate around a 50-year low and the April-June quarter expanding at 2.4%.
According to a source familiar with the exchanges between the organization and the rating office, Fitch informed Biden administration officials that the Jan. 6, 2021, insurrection was a factor in their decision to downsize since it demonstrated a fragile government. The individual, who requested anonymity to divulge private conversations, said a Fitch analysis from the previous year showed that government stability dropped between 2018 and 2021 but rose after Biden assumed office.
Conclusion:-
Due to weak governance and mounting federal, state, and municipal debt, Fitch Ratings lowered the US government’s credit score from AAA to AA+, the highest predicted rating. Risk-based downgrades underscore political divisiveness and Washington spending and expense deadlocks. During economic crises, international investors drop interest rates due to the US economy’s size and central government stability. Fitch cautioned that Congress’s credit expansion might boost the government’s triple-A rating.A compromise extended the prohibition and decreased government income by $1.5 trillion over a decade. Treasury Secretary Janet Yellen labeled Fitch’s decision “arbitrary” and based on outdated facts. Fitch notified Biden administration officials that the Jan. 6, 2021, insurrection contributed to downsizing due to a weak government.
