Fitch, a leading credit rating agency, recently downgraded the United States’ long-term credit rating. It moved from the sterling AAA category to a slightly lower AA+ rating. This move is causing a stir among economists and citizens alike.
These ratings play a significant role in determining the interest rates paid by the government and corporations. A downgrade can potentially affect borrowing costs. Therefore, most observers outside of the White House seem to concur with Fitch’s decision.
The GOP, some critics argue, bears significant responsibility for this downgraded rating. They have often treated the full faith and credit of the US as a bargaining chip. This political maneuvering creates unnecessary economic instability. Therefore, it’s unsurprising that this reality has now been reflected in our credit scores.
Some associate this downgrade with the Iraq war, an expensive venture that exerted immense pressure on the American budget. Despite potentially heading towards a surplus under Clinton, the war drastically shifted this trajectory.
More recently, advocates for fiscal responsibility have criticized Trump’s tax cuts for their contribution to the deficit. The Trump administration’s impact is indicated in this AA+ rating handed down to us.
However, the Biden administration has managed to narrow this deficit considerably. This accomplishment, while commendable, has failed to keep Fitch from downgrading our credit score. But, it’s essential to hold on to optimism for a brighter economic future. The recovery and rebuilding process requires time, concrete efforts, and effective policies. Fitch’s rating can be a crucial wake-up call for all in this context.
