Fall of U.S. credit rating reflects "erosion of governance:" WSJ

Visitors are seen at Pike Place Market in Seattle, the United States, July 20, 2023. (Xinhua/Wu Xiaoling)

Fitch said on Tuesday that the downgrade reflects an "erosion of governance" in the U.S. relative to other top-tier economies over the last two decades.

NEW YORK, Aug. 2 (Xinhua) -- Fitch Ratings downgraded the U.S. government's credit rating weeks after President Joe Biden and congressional Republicans came to the brink of a historic default, warning about the growing debt burden and political dysfunction in Washington, reported The Wall Street Journal (WSJ) on Tuesday.

Fitch's rating on the U.S. now stands at "AA+", or one notch below the top "AAA" grade.

"The downgrade, the first by a major ratings firm in more than a decade, is evidence that increasingly frequent political skirmishes over the U.S. government's finances are clouding the outlook for the 25 trillion U.S. dollars global market for Treasurys," noted the report.

It is the first time a ratings firm lowered its headline assessment of the U.S. government's propensity to pay its bills on time since Standard & Poor's in 2011 lowered its rating one notch below the top grade, according to the report. That decision followed another tense debt-ceiling standoff in Congress.

Fitch said on Tuesday that the downgrade reflects an "erosion of governance" in the U.S. relative to other top-tier economies over the last two decades. "The repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management," the agency said.

Biden administration officials said that Fitch staff, in justifying their concerns over the U.S. political system, repeatedly raised the events of Jan. 6, 2021, when supporters of former U.S. President Donald Trump stormed the capital saying the 2020 election was stolen, the report added.