Rating downgrade reflects bad governance
Fitch Ratings lowered the United States’ long-term credit rating to AA+ from its top mark of AAA on Tuesday. The agency, one of the three major credit rating companies, along with Moody’s and S&P Global Ratings, said the country’s high and growing debt burden and the “steady deterioration in the standards of governance” had undermined confidence in its fiscal management.
As predicted, US Treasury Secretary Janet Yellen disagreed with Fitch’s move, calling it “arbitrary and based on outdated data” in a statement. The White House, too, said it “strongly disagrees with this decision”. White House Press Secretary Karine Jean-Pierre said: “It defies reality to downgrade the US at a moment when President Biden has delivered the strongest recovery of any major economy in the world.”
But their protestations have only served to show Fitch has hit the nail on the head. The downgrade is the second in US history. Standard & Poor’s stripped the country of its triple-A rating in 2011, also amid a debt-limit standoff.
Fitch had indicated the possibility of a downgrade in May, then maintained that position in June even after the debt ceiling crisis of the US government was temporarily resolved.
Although US lawmakers finally agreed on further raising the country’s debt ceiling so that it can pay its bills by borrowing more from the future, the structural problem concerning the fundamental fitness of the US governance system has not been touched upon. The partisan struggle in Washington has hijacked the nation’s political system. The legislature, media outlets and other power watchdog departments in the country, which are supposedly designed to be a solid foundation for the smooth running of the US political system, are also split along party lines, which is reflective of the deeply polarized country.
Ever since former US president Donald Trump took office, the two parties have reached a tacit consensus that there is no need to continue to retain the last shreds of political decency in their power struggle.
As a result, the world has seen one political farce after another staged by the two camps of narrow-minded and shortsighted politicians, who prioritize their grip on power.
Take the debt ceiling as an example. Despite the makeshift agreement, the federal government now faces the prospect of a shutdown this fall, as lawmakers will continue to spar over how, where and what level of federal funds should be spent. The nonstop dueling risks tumbling the US economy into a “recession” in the final three months of this year. And, as Fitch has warned, that will generate spillover effects for an already troubled world.
Editorial, China Daily
