Fitch Ratings has put the United States’ credit rating at risk of downgrade due to the possibility that the government may not be able to reach an agreement to increase its debt limit in order to pay its bills.
Fitch said on Wednesday that it “still awaits a resolution” but that there is a greater risk that the debt limit will not be raised in time.
US Treasury Secretary Janet Yellen said the government could run out of money to meet its obligations, such as interest on government bonds, salaries for federal workers and government contractors, and stipends for retirees. starting June 1.
A Treasury Department statement late Wednesday said Fitch’s warning “underscores the need for swift bipartisan action by Congress to raise or suspend the debt limit and avoid a manufactured crisis for our economy.”
A White House statement said Fitch’s move “reinforces the need for Congress to quickly pass a reasonable bipartisan deal to avoid default.”
White House budget officials and House Republican negotiators have met this week to try to resolve the impasse. Discussions have involved both raising the debt limit and cutting future federal spending.
House Speaker Kevin McCarthy, a Republican, told reporters Wednesday that negotiations were still productive but days of talks have yet to produce a deal that both sides believe could win a majority of votes in both houses of Congress.
“I strongly believe that we will solve this problem,” McCarthy said. “We are not going to default.”
However, it was unclear exactly how President Joe Biden and Democrats pushing for relatively modest cuts in public spending and Republicans pushing for deeper cuts could come to an agreement, and by how much the ceiling on the tax would be increased. debt beyond its current level of $31.4 trillion.
“I will not raise taxes,” McCarthy said, rejecting a White House proposal to raise taxes on the wealthiest American taxpayers and big corporations. Nor, she said, would she allow a House vote on a measure to raise the debt ceiling without accompanying it with spending cuts.
“60% percent of Americans believe we shouldn’t raise the debt ceiling without cutting spending,” he said.
White House press secretary Karine Jean-Pierre told reporters Wednesday that the Biden administration believes it is possible to reach a “reasonable bipartisan agreement where Republicans and Democrats in the House and Senate can move forward.” ”.
Jean-Pierre said the American people do not want what she called “devastating cuts” sought by Republicans.
“House Republicans have said we should make these cuts in the name of fiscal responsibility and deficit reduction, but that’s not what this is about. That’s never been what it’s about for them,” Jean-Pierre said. “Because even as they fight to destroy investments in working families, they want to turn around and protect tax breaks skewed toward the wealthy and corporations.”
The government reached its existing borrowing limit in January, but the Treasury has since taken “extraordinary measures” to continue paying its bills. Without enough new tax receipts flowing into government coffers in the first days of June, the government would be faced with the difficult choice of deciding which bills to pay.
Authorities have warned that a default by the United States, the world’s largest economy, could prove catastrophic, roiling the world’s stock markets, forcing job layoffs in the United States and hurting the solvency of the United States, resulting in in higher interest rates for borrowers.
The US government has increased its debt ceiling 78 times over several decades, under both Democratic and Republican presidents, and three times under former President Donald Trump.
[Parte de la información para este informe provino de The Associated Press, Agence France-Presse y Reuters]
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