Global credit rating agency Fitch has put the United
States’ ‘AAA’ credit rating on “rating watch negative” based on stalled
debt ceiling negotiations.
"Although Fitch continues to believe that the debt ceiling
will be raised soon, the political brinkmanship and reduced
financing flexibility could increase the risk of a US
default," Fitch wrote in a release Tuesday afternoon.
The agency said the US Treasury, though it could still make some
obliged payments after October 17, may be exposed to “volatile
revenue and expenditure flows” based on the impasse in
Washington.
“The US risks being forced to incur widespread delays of
payments to suppliers and employees, as well as social security
payments to citizens - all of which would damage the perception
of US sovereign creditworthiness and the economy,” Fitch
wrote.
Halted talks on raising the debt ceiling risk "undermining
confidence in the role of the US dollar as the preeminent global
reserve currency, by casting doubt over the full faith and credit
of the US,” Fitch went on. “This ‘faith’ is a key reason
why the US 'AAA' rating can tolerate a substantially higher level
of public debt than other 'AAA' sovereigns.”
"The announcement reflects the urgency with which Congress
should act to remove the threat of default hanging over the
economy," a US Treasury spokesperson said.
In August 2011, credit rating agency Standard & Poor’s
downgraded the US credit rating from ‘AAA’ (outstanding)
to ‘AA+’ (excellent) amid a similar stalemate in
Washington on raising the debt ceiling.
Fitch added that the regularity of the US debt-ceiling fights
contributed to Tuesday’s move.
“The repeated brinkmanship over raising the debt ceiling also
dents confidence in the effectiveness of the US government and
political institutions, and in the coherence and credibility of
economic policy. It will also have some detrimental effect on the
US economy,” Fitch wrote.
House Republicans nixed a vote scheduled for Tuesday evening on a
plan that would have sought to reopen government agencies and
raise the debt ceiling before the US defaults on October 17.
Sources told Politico that the GOP did not have a sufficient
number of votes to pass the legislation.
The cancelled vote follows a House GOP proposal earlier Tuesday
that was rejected by the White House.
President Barack Obama said in a Tuesday interview that he
expects a deal on the debt to happen, despite the tight deadline.
"Let's not do a lot of posturing, let's not try to save face,
let's not worry about politics,” he told WABC in a note to
fellow lawmakers.
http://rt.com/usa/fitch-us-rating-negative-241/
