WASHINGTON — A stark new warning from the Fitch credit rating agency about U.S. debt added fresh urgency Thursday to ongoing debt ceiling negotiations between the White House and congressional Republicans, with only seven days to go before the United States faces an imminent threat of debt default.
Fitch Ratings, one of the big three ratings agencies, announced late Wednesday that it had placed the United States’ triple-A status on “rating watch negative.”
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“The brinkmanship over the debt ceiling, failure of the U.S. authorities to meaningfully tackle medium-term fiscal challenges that will lead to rising budget deficits and a growing debt burden signal downside risks to U.S. creditworthiness,” Fitch said in a statement on the decision.
The agency also strongly implied that if Congress could not reach a deal before the Treasury Department’s June 1 deadline to raise or suspend the debt limit, Fitch would downgrade America’s credit rating.
Such a failure “would be a negative signal of the broader governance and willingness of the U.S. to honor its obligations in a timely fashion, which would be unlikely to be consistent with a ‘AAA’ rating, in Fitch’s view.”
The warning came just hours after House Speaker Kevin McCarthy sought to calm jittery financial markets.
“I wouldn’t scare the markets in any shape or form,” the California Republican said Wednesday on Fox Business. “We will come to an agreement … and there should not be any fear.”
On Thursday, negotiators appeared to have made little discernible progress in more than a week of near round-the-clock talks.
Adding to concerns about the deadline was the decision by House leadership to send members home for a weeklong recess, albeit with instructions to stand ready to return to D.C. if their votes were needed to pass a compromise bill.
“I don’t know if we have a deal today,” McCarthy said Thursday morning as he entered the Capitol.
“We’ve already talked to the White House today, we’ll continue to work,” he said on his way out, following the day’s only vote series. “They’re working on numbers, we’re working on numbers and we’ll work together.”
Still, another Republican negotiator was optimistic about reaching a deal before the holiday weekend. Rep. Kevin Hern of Oklahoma told Reuters he believes it is “likely” a deal will be reached by Friday afternoon.
“We are inching closer to a deal. I think it’s some of the finer points they are working on right now,” Hern, who leads the large Republican Study Committee, said. “You are likely to see a deal by tomorrow afternoon.”
This is a developing story. Please check back for updates.