At best, the fact that Biden and McCarthy were able to negotiate an agreement to avert a default THiS TIME, and the House and Senate voted in what passes these days for a bipartisan fashion to endorse the deal, means that the condemned man (the U. S. economy) was granted a stay of execution, not clemency.
Although the resolution of the U.S. debt limit impasse allows the government to meet its obligations, Fitch Ratings maintains the Rating Watch Negative on the U.S. rating, as Fitch considers the full implications of the most recent brinkmanship episode and the outlook for medium-term fiscal and debt trajectories.
President Biden has signed a bill passed by the Congress to suspend the debt limit until Jan. 1, 2025 in exchange for two-year caps on non-military discretionary spending, the broadening of work requirements for some government support programs, and a rescinding of some unspent Covid related funds, among other provisions. The suspension of the debt limit was in line with Fitch’s expectations and the United States’ ‘AAA’ sovereign rating. The agreement provides an estimated savings of $1.5 trillion over the next decade, according to the Congressional Budget Office.
Fitch stated that reaching a last minute agreement despite heated political partisanship while reducing fiscal deficits modestly over the next two years are positive considerations. However, Fitch also asserted the belief that repeated political standoffs around the debt-limit and last-minute suspensions before the so-called ‘ x-date’ (when the Treasury’s cash position and extraordinary measures are exhausted) lowers confidence overall in governance on fiscal and debt matters.
Fitch expressed its view that there has been a steady deterioration in governance over the last 15 years, with increased political polarization and partisanship as witnessed by the contested 2020 election, repeated brinkmanship over the debt limit, and failure to tackle fiscal challenges due to growing mandatory spending, has led to rising fiscal deficits and debt burden.
Fitch acknowledges the U.S. rating is supported by exceptional strengths, including the size of the economy, high GDP per capita, and dynamic business environment. The U.S. dollar is the world's preeminent reserve currency, which gives the federal government unparalleled financing flexibility, but cautions that some of these strengths could be eroded over time by governance shortcomings.
In other words, one of the premier rating agencies in the world, while acknowledging the many strengths of the American economy, believes our toxic political environment has led to a deterioration in the maturity and the intelligence of the debate over what our federal budget should prioritize, and has eroded confidence in the American political system to resolve partisan disputes in a constructive manner in the future.
Translation into plain English: Trump and his legion of suckwads, far from Making America Great Again, have weakened America’s standing in the world and continue to do so even with El Naranja Grande (The Big Orange) out of office and facing legal jeopardy in multiple venues.
(The debt ceiling, as interpreted by Muddy Waters. Sorry, I’m a huge fan of Delta Blues music, and just couldn’t resist)
THE DEBT CEILIN’ BLUES
Been listenin’ to the news
An’ it’s none too good;
I got me the debt ceilin’ blues
Like all da folks in da neighborhood
Y’all betta wise up an’ make it fast
Get our fiscal house in order
Elsewise American strength ain’t gonna last
Y’all worried about folks comin’ over da border?
Dey’ll stop comin’ right quick
An’ dose dat are here might go home
When our economy’s sick
Den we’ll be all alone
So let’s get together
An’ truly make America great again
Cuz’ we wants sunny weather
Not fair weather friends
At best, the fact that Biden and McCarthy were able to negotiate an agreement to avert a default THiS TIME, and the House and Senate voted in what passes these days for a bipartisan fashion to endorse the deal, means that the condemned man (the U. S. economy) was granted a stay of execution, not clemency.
Although the resolution of the U.S. debt limit impasse allows the government to meet its obligations, Fitch Ratings maintains the Rating Watch Negative on the U.S. rating, as Fitch considers the full implications of the most recent brinkmanship episode and the outlook for medium-term fiscal and debt trajectories.
President Biden has signed a bill passed by the Congress to suspend the debt limit until Jan. 1, 2025 in exchange for two-year caps on non-military discretionary spending, the broadening of work requirements for some government support programs, and a rescinding of some unspent Covid related funds, among other provisions. The suspension of the debt limit was in line with Fitch’s expectations and the United States’ ‘AAA’ sovereign rating. The agreement provides an estimated savings of $1.5 trillion over the next decade, according to the Congressional Budget Office.
Fitch stated that reaching a last minute agreement despite heated political partisanship while reducing fiscal deficits modestly over the next two years are positive considerations. However, Fitch also asserted the belief that repeated political standoffs around the debt-limit and last-minute suspensions before the so-called ‘ x-date’ (when the Treasury’s cash position and extraordinary measures are exhausted) lowers confidence overall in governance on fiscal and debt matters.
Fitch expressed its view that there has been a steady deterioration in governance over the last 15 years, with increased political polarization and partisanship as witnessed by the contested 2020 election, repeated brinkmanship over the debt limit, and failure to tackle fiscal challenges due to growing mandatory spending, has led to rising fiscal deficits and debt burden.
Fitch acknowledges the U.S. rating is supported by exceptional strengths, including the size of the economy, high GDP per capita, and dynamic business environment. The U.S. dollar is the world's preeminent reserve currency, which gives the federal government unparalleled financing flexibility, but cautions that some of these strengths could be eroded over time by governance shortcomings.
In other words, one of the premier rating agencies in the world, while acknowledging the many strengths of the American economy, believes our toxic political environment has led to a deterioration in the maturity and the intelligence of the debate over what our federal budget should prioritize, and has eroded confidence in the American political system to resolve partisan disputes in a constructive manner in the future.
Translation into plain English: Trump and his legion of suckwads, far from Making America Great Again, have weakened America’s standing in the world and continue to do so even with El Naranja Grande (The Big Orange) out of office and facing legal jeopardy in multiple venues.
Spot on.
#3. Obviously.