Fitch, one of the major credit rating agencies, on Tuesday announced that it has downgraded the US’ long-term rating, dealing a potential blow to President Joe Biden’s economic stewardship.
The agency was unsparing in its assessment that Congress is functionally a mess, especially when it comes to raising the debt ceiling to avoid a default.
Certainly doesn’t lay the problem on one side or the other.
Erosion of Governance: In Fitch’s view, there has been a steady deterioration in standards of governance over the last 20 years, including on fiscal and debt matters, notwithstanding the June bipartisan agreement to suspend the debt limit until January 2025. The repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management. In addition, the government lacks a medium-term fiscal framework, unlike most peers, and has a complex budgeting process. These factors, along with several economic shocks as well as tax cuts and new spending initiatives, have contributed to successive debt increases over the last decade. Additionally, there has been only limited progress in tackling medium-term challenges related to rising social security and Medicare costs due to an aging population.
Consequence of stupid games. The first reason given by Fitch themselves.
The stupid game is printing money to pay for the massive federal debt.
The resulting inflation and higher interest rates mean it costs the government more to borrow money, which further increases the deficit. Biden’s attempts to seize Russia’s foreign currency reserves mean that foreign are moving away from using US bonds for their currency reserves.
Interest payments are now near $1 trillion per year and going up rapidly. We are heading towards a death spiral if the trend continues.
Bidenomics ladies and gentlemen.
I’ve got mixed feeling about this but it kinda make sense.
Let’s play “Shark Tank”:
You want to lend money to a pair of start-up business partners on a ten-year note.
You know that TOP-NOTCH partners, will, every two years or so, discuss debt and credit matters with each other, and they will discuss those matters like adults.
Only these two clowns don’t discuss matters like adults. They throw temper tantrums and act like children.
→ Ergo they are not the best of borrowers and do not deserve the best interest rate.
so its Bidens fault somehow that the congress cant get its ■■■■ together and raise the debt ceiling?
the debt ceiling crisis that caused the downgrade was congress’s albatross
and congresses alone.
its partisan puffery to blame POTUS for something that is clearly congresses purview.
Allan
Not sure why you made that reply to me.
In fact, I deliberately said this about the downgrade:
clearly lies at the feet of our congress.
and specially kevin McCarthy and his minions.
the house is clearly at fault.
Allan
This is a great example of why your posts are so frequently stupid.
it was directly connected to McCarthy and the freedom caucus.
to deny that is to deny that harsh reality of the situation.
Allan
to lay the blame on the both sides is disingenuous.
Allan
Yes, it would be disingenuous.
the US hit its most recent debt ceiling in Jan 2023 when the Dems controlled the WH and Congress. The Dems have consistently gained in the polls during debt ceiling showdowns so not surprisingly they extended the debt ceiling a teensy tiny little bit just until the incoming GOP would control the House.
–>Long term, I’ll let you blame whomever you want.<–
But this year, this particular time, blaming anyone but the Dems for the showdown is disingenuous at best. They wanted this year’s showdown. They got it. This year’s showdown was 100% the Dems fault.
the dems do NOT control he house.
Allan
Didn’t this happen during Obama too?
I wonder if the United States has a Credit Karma account to check their credit score and help rebuild it . 
.
Good news USA your odds for this Treasury Market deal are fair. LOL
They did in January when the debt ceiling expired.
In Jan when the debt ceiling expired, the Demsontrolled the House
At that time they decided NOT to raise the debt ceiling 1 year or 2 years or 3.
They (Nancy Pelosi) raised it just a teensy weensy itty bitty amount pushing into the time when the GOP would control the House.
There is one and only one plausible explanation for this.
The analysis from Fitch referenced ongoing problems – decades of problems. To point to one or another entity as the responsible party is … irresponsible. It’s just partisan hackery.
This problem has been a long time coning, spanning multiple administrations and Congresses, and is really rooted in an overall attitude of unfettered spending. “Steady deterioration of governance.” We just crossed a line that Fitch could no longer ignore. It merely happened on Biden’s watch. Had Trump won 2020, it would have happened on his instead.
I contend that there is a line (somewhere) that is a cliff, not merely a next line. When we cross it, the plunge will be quick and drastic.
I see the downgrade as a wake-up call to our government at large. This was really a minor rebuke, moving from AAA to AA+. The next one might not be so minimal. But what are we seeing in response? Certainly no sense of contrition. No call to heed the warning. Instead, government entities are trying to say that Fitch is mistaken.
I fear this will not end well.
Yeah, but didn’t this already happen under Obama? Did we get that third A back then lose it again?
Don’t recall.
Hope someone else can confirm or debunk.
Yeppers by S@P what happened to Simpson and Bowles to address this problem.
