Bloomberg News reports that Washington’s hostile political factions have taken up the downgrade of Fitch Ratings of US government debt rather quickly. They have been using it as a new political combat weapon, thereby highlighting in part why the firm strips the United States of the top-tier credit it has been enjoying.
What have Republicans and Democrats have to say?
On Wednesday, the Democrats and Republicans traded the blame related to the downgrade. Amongst them, a group comprising hard right conservatives that had promised to dig in during the monsoon loomed a spending fight that would be able to bring shutters down the federal government as soon as October 1st.
What did the changes echo?
The changes that took place only echo the concerns raised by the Fitch ratings that announced the decision soon after the closure of the financial markets Tuesday.
Fitch cited in a statement that erosion of governance which is relative to “AA” as well as “AAA,” had rated the peers over the past twenty years. This manifested in the recurring debt limits standoffs as well as the last-minute resolutions.
President Joe Biden spent the entire summer promoting the “Bidenomics” agenda while the economy showed surprising strength. He was seen to be frustrated privately over the decision given by Fitch. So he expressed his annoyance and irritation to his team members. This was revealed by the people that are familiar with the matter.
Bloomberg News reports that the President did not comment Wednesday when he was asked about the decision of Fitch. The Republicans have blamed decisions of Biden’s policies as the probable cause of the Fitch ratings. They revealed that spending on domestic programs was instrumental in triggering the national debt.
Meanwhile, the markets were found shrugging off the downgrade in ratings. The Treasury yields were found to drop initially in the Asian markets. On Wednesday, bond investors boosted the Treasury yields, fostered by the plans for a debt issuance by the government related to the flood. The data suggested that US companies had been adding more jobs than were anticipated in July.
Biden blames Trump
Bloomberg also reported that Biden’s team blamed Donald Trump for the downgrade in ratings. He called it a reaction triggered by the former president’s reckless behavior and actions in his office earlier. He said that these reckless actions also included Trump’s efforts to overturn the elections in 2020.
