The U.S. is on credit watch as high-stakes negotiations over the debt limit take center stage in Washington. Credit agencies are warning that the nation’s stellar credit rating could be downgraded as the U.S. inches closer to running out of cash and defaulting on its roughly $31.4 trillion debt. Capitol Hill is getting nervous. “Most…
The U.S. is on credit watch as high-stakes negotiations over the debt limit take center stage in Washington.
Credit agencies are warning that the nation’s stellar credit rating could be downgraded as the U.S. inches closer to running out of cash and defaulting on its roughly $31.4 trillion debt.
Capitol Hill is getting nervous.
“Most Americans treasure their individual credit rating and do everything they can to keep it as good as possible, at least if they have the circumstances that they can do so,” Rep. Susan Wild (D-Pa.) said this week, while raising concern that a “reduction in our credit rating is the beginning.”
Fitch Ratings, a prominent credit ratings agency, drew attention earlier this week when it warned the nation’s credit standing was at risk of a downgrade.
The agency — which, along with S&P Global Ratings (S&P) and Moody’s, is seen among the top three ratings agencies — said at the time that it would additionally be placing the country’s pristine AAA rating on “rating watch negative.” The move reflects “increased political partisanship that is hindering reaching a resolution to raise or suspend the debt limit despite the fast-approaching X-Date,” Fitch said.
Not long after that statement, credit rater DBRS Morningstar later also warned the U.S. was at risk of being downgraded, saying the current “debt ceiling impasse poses a potential threat to the United States’ AAA rating.”
Experts say they wouldn’t be surprised if there’s more to follow from other agencies in the coming days. So, what’s the big deal?
The recent warnings indicate increased risk among investors that the nation’s reputation as “a creditworthy borrower could be called into question,” Rachel Snyderman, senior associate director of business and economic policy for the Bipartisan Policy Center, said Friday.
