Fitch Ratings, a renowned credit-rating agency, has downgraded the long-term debt of the United States from AAA to AA+. The downgrade was based on Fitch’s assessment of the expected fiscal deterioration over the next three years, the high and growing general government debt burden, and the erosion of governance. This downgrade is a clear indication that President Biden’s economic policies, often referred to as Bidenomics, have had a negative impact on the economy.
Fitch specifically called out the rising government deficit, forecasting a jump to 6.3% of GDP in 2023, up from 3.7% in 2022. The reasons behind this downgrade are not surprising, considering the massive spending initiatives undertaken by the Biden administration. These initiatives include the $1.9 trillion American Rescue Plan, the $500 billion Inflation Reduction Act, the $1 trillion infrastructure bill, and the $280 billion Chips Act. The cumulative effect of these initiatives has led to a disastrous economic situation.
Despite warnings from the Congressional Budget Office that the Inflation Reduction Act would not solve the problem and could make it worse, President Biden and his administration chose to ignore the alarm bells. Treasury Secretary Janet Yellen even dismissed Fitch’s downgrade as “entirely unwarranted” and “puzzling” in light of the perceived economic strength of the United States. However, a soaring deficit is not a sign of economic strength; it is a ticking time bomb.
Senator Joe Manchin, a Democrat who has been critical of the administration’s fiscal policies, characterized the Fitch downgrade as a “historic failure of leadership by both political parties and the executive branch.” He emphasized the need for immediate action to address the nation’s $32 trillion debt and warned that the downgrade is a stark warning that cannot be ignored. Manchin called on elected leaders from both parties to work together and send a clear message to the world that the necessary steps will be taken to restore the country’s credit rating and keep the economy strong.
However, the prospects of bipartisan cooperation in an election year seem uncertain. Admitting that there is a problem and working towards a solution would require real leadership, which may not align with President Biden’s re-election bid. As the September 30 end of the fiscal year approaches, there is a small window of opportunity for lawmakers and the president to improve the nation’s fiscal outlook. Only time will tell if they will rise to the occasion and take the necessary steps to address the economic challenges facing the United States.
In conclusion, Fitch’s downgrade of America’s long-term debt rating from AAA to AA+ is a clear indication of the economic mismanagement under President Biden’s administration. The rising government deficit, coupled with the massive spending initiatives, has led to a deteriorating fiscal outlook. It is crucial for elected leaders to put aside partisan differences and work together to restore the country’s credit rating and ensure the strength of the economy for future generations. However, given the current political climate, achieving this goal may be challenging.
Original Story at www.bostonherald.com – 2023-08-04 04:26:10
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