rating agency Fitch On Wednesday, it said it had assigned the sovereign rating “AAA” to it United State in Negative credit control Because of the growing political disputes and Uncertainty about the debt limit from the state.
Fitch noted that the country’s rating could be downgraded if United State Do not raise or suspend your debt limit on the specified date. However, he added that The chances of the US not paying its debts on time are very low.
Fitch Ratings now projects that the US government will spend more than it takes in, leading to a deficit of 6.5% of the country’s total economy in 2023 and 6.9% in 2024.
This Wednesday, the main Wall Street indexes shut down in absence Agreement between the White House and Republican members of Congress about the increase in debt ceilingventilate Fear of unprecedented government failure.
Democratic President’s negotiators Joe Biden and a major Republican Congress Kevin McCarthy They met again in White House This Wednesday to try to close a deal That allows Raise the US debt ceilingl 31.4 billion US dollarsand avoid a catastrophic default.
he Treasury department He warned that the federal government may not be able to pay all its bills in eight days, while it takes several days for legislation to pass in a deeply divided Congress.
Default risk?
To eliminate the risk of default, Congress must increase the country’s debt limit. Democrats control the Senate and Republicans control the House of Representatives.
The so-called “debt ceiling,” more than $31 trillion, was reached in January, but so far the federal government has managed the situation with accounting maneuvers.
By not honoring its obligations, the United States will no longer be able to pay holders of Treasury bondsA haven for global finance. The government cannot, for example, pay benefits or pensions.
Economists warn that the consequences for the global economy will be catastrophic.
Meanwhile, the president Biden has offered to freeze some public spending at current levelsThat would reduce the fiscal deficit by an additional $1 trillion over 10 years, Treasury Secretary Janet Yellen said Wednesday.
The savings proposed by Biden should reduce the differences between Republican and Democratic plans in terms of public spending, the center of a dispute that has made the United States count the days until default.
Spending adjustment
The Treasury secretary reiterated that the government could run out of money on June 1st. “The president’s budget plan actually proposes to cut the deficit by $3 trillion over 10 years,” Yellen said. At an event for the Wall Street Journal on Wednesday.
“In these negotiations, the president offered changes that could lead to another trillion dollars in deficit reduction,” he explained.
Republicans say their spending plans cut the deficit by $4.8 trillion over a decade, with no cuts to defense or border security.
The White House wants to distribute any cuts so as not to overburden some sectors, and wants to raise some taxes, something Republicans oppose.
House Republican Leader Kevin McCarthy, who is leading talks with Biden and opposition demands for spending cuts, said there could be “progress today,” referring to ongoing negotiations during the day. But he again accused the government of waiting until the last minute to negotiate.
