WASHINGTON — A stark recent warning from the Fitch credit standing agency about U.S. debt added fresh urgency Thursday to ongoing debt ceiling negotiations between the White House and congressional Republicans, with only seven days to go before the USA faces an imminent threat of debt default.
Fitch Rankings, one among the large three rankings agencies, announced late Wednesday that it had placed the USA’ triple-A standing on “rating watch negative.”
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“The brinkmanship over the debt ceiling, failure of the U.S. authorities to meaningfully tackle medium-term fiscal challenges that can result in rising budget deficits and a growing debt burden signal downside risks to U.S. creditworthiness,” Fitch said in an announcement on the choice.
The agency also strongly implied that if Congress couldn’t reach a deal before the Treasury Department’s June 1 deadline to lift or suspend the debt limit, Fitch would downgrade America’s credit standing.
Such a failure “can be a negative signal of the broader governance and willingness of the U.S. to honor its obligations in a timely fashion, which can be unlikely to be consistent with a ‘AAA’ rating, in Fitch’s view.”
The warning got here just hours after House Speaker Kevin McCarthy sought to calm jittery financial markets.
“I would not scare the markets in any shape or form,” the California Republican said Wednesday on Fox Business. “We’ll come to an agreement … and there shouldn’t be any fear.”
On Thursday, negotiators appeared to have made little discernible progress in greater than per week of near round the clock talks.
Adding to concerns concerning the deadline was the choice by House leadership to send members home for a weeklong recess, albeit with instructions to face able to return to D.C. if their votes were needed to pass a compromise bill resulting from a deal reached by President Joe Biden and McCarthy.
“I do not know if we’ve a deal today,” McCarthy said Thursday morning as he entered the Capitol.
“We have already talked to the White House today, we’ll proceed to work,” he said on his way out, following the day’s only vote series. “They’re working on numbers, we’re working on numbers and we’ll work together.”
One influential Republican said he was optimistic about reaching a deal before the vacation weekend. Rep. Kevin Hern of Oklahoma, who chairs the 156-member Republican Study Committee, said Thursday that he believed it was “likely” a deal can be reached by Friday afternoon.
“We’re inching closer to a deal. I feel it’s a number of the finer points they’re working on without delay,” Hern told Reuters. “You might be more likely to see a deal by tomorrow afternoon.”
Democrats meanwhile, have turn into increasingly critical this week of the White House’s apparent alternative to not disclose details of the talks frequently. It is a tactic that stands in stark contrast to McCarthy’s full court PR press of chatting with journalists several times a day concerning the talks and appearing on TV near each day.
The White House sought to deflect the criticism, arguing that Biden had been speaking concerning the debt ceiling for months.
“We have been very clear for the past five months,” White House press secretary Karine Jean-Pierre said earlier this week. “I would not just take a look at the last couple of days. The past five months, consistently, you’ve got heard from this president.”
On Thursday, White House chief of staff Jeff Zients issued a rare tweet on the debt ceiling.
“Even now, Republicans wish to add $3.5 trillion to the debt by extending the Trump tax giveaways for the rich,” he wrote. What Zients didn’t say is that Biden also wants to increase those cuts, but just for households making lower than $400,000, and offset the associated fee by raising other taxes.
This can be a developing story. Please check back for updates.
