The Fitch Ratings has downgraded the U.S. credit rating, citing an expected increase in government debt over the next three years and a 'steady deterioration in standards of governance' over the past two decades.
WASHINGTON — Fitch Ratings has downgraded the United States government's credit rating, citing rising debt at the federal, state, and local levels and a "steady deterioration in standards of governance" over the past two decades.
The decision illustrates one way that growing political polarization and repeated Washington standoffs over spending and taxes could end up costing U.S. taxpayers. In 2011, the ratings agency Standard & Poors stripped the U.S. of its prize AAA rating and also pointed to partisan divisions that made it difficult for the world's biggest economy to control spending or raise taxes enough to reduce its debt.
At the same time, the size of the U.S. economy and historic stability of the U.S. government has kept its borrowing costs low, even after the Standard & Poor's downgrade. Another factor in Fitch's decision is that it expects the U.S. economy to tumble into a "mild recession" in the final three months of this year and early next year. Economists at the Federal Reserve made a similar forecast this spring but then reversed it in July and said growth would slow but a recession would likely be avoided.
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