2023-05-25 22:26:41
The rating agency Fitch placed the United States’ AAA rating on Wednesday, May 24, on negative watch, while the United States Treasury claims that it will not be able to pay its bills from 1is June. “It seems almost certain that we will not be able to exceed at the beginning of June”, said Treasury Secretary Janet Yellen.
In question, the debt ceiling. Fixed at 31,400 billion dollars by Congress, it should be reached at the beginning of June, following months of accounting and financial tricks. Negotiations on his raising continue behind closed doors between the Republicans, who dominate the House of Representatives, and the White House. The first, led by the speaker of the House and elected from California, Kevin McCarthy, want to condition this increase on a reduction in spending. Officially, Democratic President Joe Biden does not want it, denouncing blackmail. But he negotiates anyway.
Nevertheless, the case endangers the financial stability of the planet and reveals the political paralysis of Washington. Fitch denounces in its press release “increased political partisanship that prevents reaching a resolution to raise or suspend the debt ceiling despite the fast approaching date [fatidique] “. The agency sharply criticizes Washington’s governance: “The disputed presidential election of 2020, the hardline over the debt limit ceiling to advance political agendas and the inability to reach consensus on the country’s fiscal challenges are recent signs of the deterioration of governance. »
Future deterioration of public finances
Joe Biden repeats that he has halved the deficits, but it is only because the programs related to the Covid-19 voted under his mandate, with a Democratic majority in the House, and under that of Donald Trump, are coming to an end .
In fact, Fitch predicts a sharp deterioration to come in US public finances. The agency “now projects a general government deficit of 6.5% of GDP in 2023 and 6.9% of GDP in 2024, from 5.5% in 2022”adding that “the increase in the interest charge and the increase in expenditure corresponding to rights [notamment la santé et la retraite] will keep deficits above 7% of GDP on average over the next decade”.
The two other major agencies, S&P and Moody’s, have so far not budged. S&P is the only one to have removed its triple A in the United States since a similar crisis that occurred in 2011.
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