White House, Treasury Strongly Disagree With Fitch Downgrading Credit Rating
The White House and the Treasury have strongly disagreed with Fitch Ratings’ decision to downgrade the U.S. credit rating.
Fitch Ratings downgraded the U.S. credit rating by one notch to AA+, citing high debt burden at the federal, state, and local levels and a concerning decline in governance standards over the last two decades in the United States.
The rating agency said that during the last 20 years, there has been a decline in the standard of governance in the country, the effect of which is visible in fiscal and debt decisions.
The decision sparked a strong reaction from the White House, with press secretary Karine Jean-Pierre saying the move “defies reality.”
“The ratings model used by Fitch declined under President Trump and then improved under President Biden, and it defies reality to downgrade the United States at a moment when President Biden has delivered the strongest recovery of any major economy in the world,” she said in a statement issued late Tuesday.
Jean-Pierre also lashed out at Republicans for trying to undermine the government’s economic policies.
“And it’s clear that extremism by Republican officials — from cheerleading default, to undermining governance and democracy, to seeking to extend deficit-busting tax giveaways for the wealthy and corporations — is a continued threat to our economy.”
Treasury Secretary Janet Yellen called the American credit rating agency’s latest update “arbitrary and based on outdated data.”
“The change by Fitch Ratings announced today is arbitrary and based on outdated data. Fitch’s quantitative ratings model declined markedly between 2018 and 2020 – and yet Fitch is announcing its change now, despite the progress that we see in many of the indicators that Fitch relies on for its decision. Many of these measures, including those related to governance, have shown improvement over the course of this Administration, with the passage of bipartisan legislation to address the debt limit, invest in infrastructure, and make other investments in America’s competitiveness,” she said in a statement.
According to the U.S. Treasury chief, Fitch’s decision does not change what Americans, investors, and people all around the world already know: that Treasury securities remain the world’s preeminent safe and liquid asset, and that the American economy is fundamentally strong.
Recalling that the United States has undergone a historically fast economic recovery from a deep recession over the past few years, Yellen claimed that the unemployment rate is near historic lows, inflation has come down significantly since last summer, and last week’s GDP report shows that the U.S. economy continues to grow.
Yellen said that she and President Joe Biden have been focused on making critical investments in the country’s core economic strength and productive capacity, and are committed to fiscal sustainability.
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