CNN

America’s hyper partisanship could cost it its sterling AAA credit rating, Fitch warns

May 25, 2023, 6:00 AM

The U.S. Capitol Dome is seen during on April 17 in Washington, DC. A deadlocked Congress that has ...

The U.S. Capitol Dome is seen during on April 17 in Washington, DC. A deadlocked Congress that has taken America to the brink of default could jeopardize the United States’ perfect credit rating. Photo credit: Anna Moneymaker/Getty Images/FILE

(CNN) — A deadlocked Congress that has taken America to the brink of default could jeopardize the United States’ perfect credit rating, Fitch said in a stern warning Wednesday.

The credit ratings agency placed top-ranked US credit on rating watch negative, reflecting the uncertainty surrounding the current debt ceiling debate and the possibility of a first-ever default.

The move comes as as Republican and Democratic lawmakers negotiate to raise the US debt limit, though no deal has yet been reached. With Treasury Secretary Janet Yellen saying the US may be unable to pay its bills as soon as June 1, the country faces the possibility of an unprecedented default, which could have disastrous effects both in the United States and all over the world.

Fitch, one of the top three credit rating agencies along with Moody’s and S&P, placed the US “AAA” on “rating watch negative,” signaling that it could downgrade US debt if lawmakers do not agree on a bill that raises US Treasury’s debt limit.

“The Rating Watch Negative reflects increased political partisanship that is hindering reaching a resolution to raise or suspend the debt limit despite the fast-approaching x date (when the U.S. Treasury exhausts its cash position and capacity for extraordinary measures without incurring new debt),” the company said in a statement.

However, Fitch added that it still believed lawmakers would pass a resolution before the “X-date.”

The White House on Wednesday pointed to Fitch Ratings’ move as cause for urgency on raising the debt ceiling.

“This is one more piece of evidence that default is not an option and all responsible lawmakers understand that. It reinforces the need for Congress to quickly pass a reasonable, bipartisan agreement to prevent default,” a White House spokesperson said in a statement.

The Treasury Department on Wednesday night also emphasized that, and said a potential downgrade shows why Congress must immediately address the debt ceiling.

“As Secretary Yellen has warned for months, brinkmanship over the debt limit does serious harm to businesses and American families, raises short-term borrowing costs for taxpayers, and threatens the credit rating of the United States,” Treasury spokesperson Lily Adams said in a statement.

“Tonight’s warning underscores the need for swift bipartisan action by Congress to raise or suspend the debt limit and avoid a manufactured crisis for our economy,” Adams said

In 2011, S&P gave its first-ever credit downgrade to the US, cutting its rating to AA+. More than a decade later, that agency has still not restored its rating.

A US default could send shockwaves throughout the global economy and potentially cause a recession, according to experts. That could mean higher borrowing costs for the government and Americans themselves and a massive drag to economic growth.

Dow futures fell more than 85 points on Wednesday night amid Fitch’s warning, but the S&P 500 and Nasdaq traded in positive territory.

We want to hear from you.

Have a story idea or tip? Send it to the KSL NewsRadio team here.

Today’s Top Stories

CNN

People swim in the surf at Waimea Bay Beach Park on the North Shore of Oahu, Hawaii, under a warnin...

Forrest Brown

647 people drown each day. Here’s how to avoid being one of them

(CNN) — On Good Friday 2017, Wyatt Werneth got a call from his wife, who had gone grocery shopping with their daughter: The car’s broken down. Please rescue us. Werneth hopped in his vehicle to assist, driving by Patrick Space Force Base near Cape Canaveral, Florida. From the A1A highway, Werneth said you can see the […]

1 day ago

Payment apps like PayPal and Venmo might be convenient, but they’re not banks — and a federal f...

Chris Isidore

Don’t store cash in Venmo and PayPal, US regulator warns

NEW YORK (CNN) — Payment apps like PayPal and Venmo might be convenient, but they’re not banks — and a federal financial services watchdog is worried that too many consumers are treating them as such. Some consumers are using services like PayPal, Venmo, Cash App and Apple Pay for direct deposit of paychecks, or simply […]

1 day ago

President Joe Biden and House Republicans have reached an agreement in principle to address the deb...

Tami Luhby

Here’s what’s in the debt ceiling package

(CNN) — Congress has passed the debt ceiling package, just days before the Treasury Department would have run out of sufficient funds to pay all of the nation’s obligations on time and in full. After months of stalemate and weeks of tense negotiations, the deal came together over the Memorial Day holiday weekend. But its passage in Congress […]

2 days ago

Hundreds of Gannett journalists plan to stage a one-day strike during the media company’s annual ...

Oliver Darcy

Journalists at the nation’s largest newspaper chain are walking off the job in a showdown with its CEO

(CNN) — The biggest newspaper chain in the country is about to be rocked by the biggest walkout of its staff in history. On Monday, hundreds of Gannett journalists plan to stage a one-day strike during the media company’s annual shareholder meeting. Their message: Gannett needs new leadership. The journalists want shareholders to take a vote […]

2 days ago

The store owner, identified as 58-year-old Rick Chow, was arrested and charged Monday with Cyrus’...

Rebekah Riess and Nouran Salahieh, CNN

Convenience store owner in So. Carolina charged with murder

A South Carolina convenience store owner has been charged with murder after allegedly chasing a 14-year-old boy and shooting him in the back after suspecting the boy of shoplifting, authorities said.

3 days ago

Speaker of the House Kevin McCarthy speaks to reporters as he walks through Statuary Hall in the U....

Clare Foran, Kristin Wilson and Haley Talbot

House passes debt limit deal as lawmakers race to avert default

Lawmakers are racing the clock to avert a first-ever default ahead of June 5, a critical date set by the Treasury Department.

4 days ago

Sponsored Articles

close up of rose marvel saliva blooms in purple...

Shannon Cavalero

Drought Tolerant Perennials for Utah

The best drought tolerant plants for Utah can handle high elevations, alkaline soils, excessive exposure to wind, and use of secondary water.

Group of cheerful team members high fiving each other...

Visit Bear Lake

How To Plan a Business Retreat in Bear Lake This Spring

Are you wondering how to plan a business retreat this spring? Read our sample itinerary to plan a team getaway to Bear Lake.

Cheerful young woman writing an assignment while sitting at desk between two classmates during clas...

BYU EMBA at the Marriott School of Business

Hear it Firsthand: 6 Students Share Their Executive MBA Experience at BYU’s Marriott School of Business

The Executive MBA program at BYU offers great opportunities. Hear experiences straight from students enrolled in the program.

Skier being towed by a rider on a horse. Skijoring....

Bear Lake Convention and Visitors Bureau

Looking for a New Winter Activity? Try Skijoring in Bear Lake

Skijoring is when someone on skis is pulled by a horse, dog, animal, or motor vehicle. The driver leads the skiers through an obstacle course over jumps, hoops, and gates.

Banner with Cervical Cancer Awareness Realistic Ribbon...

Intermountain Health

Five Common Causes of Cervical Cancer – and What You Can Do to Lower Your Risk

January is National Cervical Cancer Awareness month and cancer experts at Intermountain Health are working to educate women about cervical cancer.

Kid holding a cisco fish at winterfest...

Bear Lake Convention and Visitors Bureau

Get Ready for Fun at the 2023 Bear Lake Monster Winterfest

The Bear Lake Monster Winterfest is an annual weekend event jam-packed full of fun activities the whole family can enjoy.

America’s hyper partisanship could cost it its sterling AAA credit rating, Fitch warns