Following a meeting with senior Biden aides last month, analysts at Fitch Ratings sent the White House a draft of their assessment of the U.S. government's credit and requested notes and corrections, a Treasury Department official told The Washington Post.
No mention was made about downgrading the government's credit, and Biden aides were hopeful that the successful resolution to the debt ceiling crisis earlier this year would count in their favor, the official said.
When Fitch announced the downgrade of the federal government's credit on Monday, Biden administration officials were reportedly shocked by the decision.
In a statement on Tuesday, Fitch pointed to both the rising debt burden and U.S. political dysfunction as reasons to question the government's ability to pay its bills. Lowering the credit rating from AAA to AA+, Fitch cited "repeated debt limit standoffs and last-minute resolutions" as factors in its decision.
The debt ceiling determines the total amount that the Treasury Department can legally borrow and raising it takes an act of Congress. Bondholders of U.S. debt could potentially not be repaid in full if lawmakers don't act in time.
Richard Francis, a senior director at Fitch Ratings, told Reuters that Jan. 6 also played a role in the downgrade, as it highlights domestic fissures that could threaten the response of lawmakers to financial crises.
"As we demonstrated with multiple statements and a thorough press call minutes after the announcement, we strongly disagreed with Fitch's reasoning — and have since been echoed by a wide range of experts — but anticipated and were fully prepared for their decision," White House spokesman Andrew Bates said in a statement.
Although it caught the administration by surprise, the ratings agency's decision to downgrade government debt after the standoff this spring reveals Washington's perennial battles over rising levels of federal debt. The national debt, according to Fitch's warnings, has skyrocketed and is showing no signs of slowing down. Additionally, Congress is unlikely to take action on it before the 2024 presidential election, the agency said.
Many experts say another threat to U.S. fiscal health are long-term debts, which now total more than $31 trillion, and it remains unclear how Congress intends to resolve funding crises for Social Security and Medicare, which both are facing automatic cuts in the next decade if nothing is done.
"We avoided a very bad situation with the debt ceiling, but we did not fundamentally address the problems with long-term spending and long-term revenue we have going forward," G. William Hoagland, a senior vice president at the Bipartisan Policy Center, told the Post. "We are going to have to deal with this again at some point."
© 2025 Newsmax. All rights reserved.