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The downgrading of Fitch Ratings’ US government debt rating from AAA to AA+ sent shockwaves through the White House and other institutions.
The United States was ranked by Fitch one notch below a number of countries, including Australia, Denmark, the Netherlands, and Germany, and just above France and the United Kingdom, but neither of the other two rating agencies, S&P or Moody’s, altered their rankings.
Despite Fitch having informed customers in May that the rating was being examined, several people nevertheless expressed surprise.
Could the aging political class have played a role in Fitch’s decision, along with other, more evident factors? Though it may seem unusual to raise this question given my impending 90th birthday, I am aware that it is important to do so.
Reactions to the Fitch judgment came from former Treasury Secretary Larry Summers, who characterized it as odd and incompetent. The CEO of JP Morgan, Jamie Dimon, referred to it as absurd.
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Protest in Perspective: Fitch’s Rating Decision
According to the White House, what matters most right now is how the economy is doing. At a time when President Biden has overseen the strongest recovery of any nation in the world, press secretary Karine Jean-Pierre said that downgrading the United States defies logic.
Shakespeare’s quote is a good example of how much the lady is protesting. The increase in the GDP for this year was not a focus for Fitch.
It was not the pandemic’s recovery, or lack thereof, that was the topic of the decision. It’s true that the protest was in reference to all four of the previous administrations, not just the Biden one.
The rating downgrade, according to Fitch, “reflects the anticipated fiscal deterioration over the next three years, a high and rising general government debt burden [including state and municipal debt] and the erosion of governance over the last two decades that has been manifested in repeated debt limit standoffs and last-minute resolutions.”
Little was stated about the US debt’s extraordinary run-up, which reached about $10 trillion in 2000, $26 trillion in 2019, and $30.9 trillion in 2022, in the ensuing conversation. Shorter-term economic statistics received disproportionate focus in its place.
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Source: www.washingtonexaminer.com
