Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

America could be hit with a debt downgrade for the first time since 2011

America could be hit with a debt downgrade for the first time since 2011

Fitch Ratings warned Friday that the fight in Washington over raising the debt ceiling could force the firm to downgrade America's AAA credit rating.

"The failure of the latest efforts to suspend the U.S. federal government's debt limit indicates that the current stand-off could be among the most protracted since 2013," Fitch said.

Echoing what S&P Global Ratings said Thursday, Fitch said it believes the debt limit will be raised or suspended "in time to avert a default event."

However, Fitch added that "if this were not done in a timely manner, political brinksmanship and reduced financing flexibility could increase the risk of a US sovereign default."

The Treasury Department has warned it will run out of cash and exhaust extraordinary measures by October 18. At that point, Treasury would no longer have 100% confidence it could pay America's bills.

Fitch suggested that getting near that date could trigger a downgrade.

"We view reaching the Treasury's X-date without the debt limit having been raised as the principal tail risk to the US sovereign's willingness and capacity to pay," Fitch said. "If this appeared likely we would review the US sovereign rating, with probably negative implications."

Fitch reiterated that the United States would likely get downgraded even if it kept paying bondholders, but delayed other payments like Social Security and paychecks to federal workers.

"Prioritization of debt payments, assuming this is an option, would lead to non-payment or delayed payment of other obligations, which would likely undermine the U.S.'s 'AAA' status," Fitch said.

During the 2011 debt ceiling fight, S&P downgraded the US credit rating for the first time ever, while Fitch and Moody's kept a perfect AAA rating on the world's largest economy. Fitch has had a negative outlook on the United States since July 2020.

"The debt limit impasse reflects a lack of political consensus that has hampered the U.S.'s ability to meet fiscal challenges for some time," Fitch said on Friday.

Fitch said amending the reconciliation bill to address the debt ceiling "appears the most viable option for raising the debt ceiling, but the process would take some time in the Senate."

Newsletter

Related Articles

0:00
0:00
Close
Unelected PM of the UK holds an emergency meeting because a candidate got voted in… which he says is a threat to democracy…
Farmers break through police barriers in Brussels.
Ukraine Arrests Father-Son Duo In Lockbit Cybercrime Bust
US Offers $15 Million For Info On Leaders Of Cybercrime Group Lockbit
Apple warns against drying iPhones with rice
Alexei Navalny: UK sanctions Russian prison chiefs after activist's death
German economy is in 'troubled waters' - ministry
In a recent High Court hearing, the U.S. argued that Julian Assange endangered lives by releasing classified information.
Tucker Carlson says Boris Johnson wants "a million dollars, in Bitcoin or cash, from Tucker Carlson to talk about Ukraine.
Russia is rebuilding capacity to destabilize European countries, new UK report warns
EU Commission wants anti-drone defenses at Brussels HQ
Von der Leyen’s 2nd-term pitch: More military might, less climate talk
EU Investigates TikTok for Child Safety Concerns
EU Launches Probe Into TikTok Over Child Protection Under Digital Content Law
EU and UK Announce Joint Effort on Migration
Ministers Confirm Proposal to Prohibit Mobile Phone Usage in English Schools
Avdiivka - Symbol Of Ukrainian Resistance Now In Control Of Russian Troops
"Historic Step": Zelensky Signs Security Pact With Germany
"Historic Step": Zelensky Signs Security Pact With Germany
Russian opposition leader Alexey Navalny has died at the Arctic prison colony
Tucker Carlson grocery shopping in Russia. This is so interesting.
France and Germany Struggle to Align on European Defense Strategy
‘A lot higher than we expected’: Russian arms production worries Europe’s war planners
Greece Legalizes Same-Sex Marriage and Adoption Rights
Russia "Very Close" To Creating Cancer Vaccines, Says Vladimir Putin
Hungarian Foreign Minister: Europeans will lose Europe, the Union's policy must change drastically
Microsoft says it caught hackers from China, Russia and Iran using its AI tools
US Rejects Putin's Ceasefire Offer in Ukraine
The Dangers of Wildfire Smoke and Self-Protection Strategies
A Londoner has been arrested for expressing his Christian beliefs.
Chinese Women Favor AI Boyfriends Over Humans
Greece must address role in migrant vessel disaster that killed 600: Amnesty
Google pledges 25 million euros to boost AI skills in Europe
Hungarian President Katalin Novák Steps Down Amid Pardon Controversy
Activist crashes Hillary Clinton's speech, calls her a 'war criminal.'
In El Salvador, the 'Trump of Latin America' stuns the world with a speech slamming woke policing after winning a landslide election
Trudeau reacts to Putin's mention of Canadian Parliament applauding a former Ukrainian Nazi in his interview with Tucker Carlson.
The Spanish police blocked the farmers protest. So the farmers went out and moved the police car out of the way.
Volodymyr Zelenskiy fires top Ukraine army commander
Tucker Carlson's interview with Vladimir Putin raises EU concerns
Finnish Airline, Finnair, is voluntarily weighing passengers to better estimate flight cargo weight
Russia's Economy Expands by 3.6% Due to Increased Military Spending
Ukraine MPs Vote To Permit Use Of Dead Soldiers' Sperm
German Princess Becomes First Aristocrat To Pose Naked On Playboy Cover
UK’s King Charles III diagnosed with cancer
EU's Ursula von der Leyen Confronts Farmer Protests Amid Land Policy Debates
Distinguishing Between Harmful AI Media and Positive AI-Generated Content: A Crucial Challenge for the EU
Tucker Carlson explains why he interviewed Putin
Dutch farmers are still protesting in the Netherlands against the government, following the World Economic Forum's call for 'owning nothing.'
Hungarian Prime Minister Viktor Orbán stands up for European farmers and says, 'Brussels is suffocating European farmers.
×