The U.S. was stripped of its top-tier sovereign credit grade by Fitch Ratings, which criticized the country¡¯s ballooning fiscal deficits and an ¡°erosion of governance¡± that¡¯s led to repeated debt limit clashes over the past two decades.
The credit grader cut the U.S. one level from AAA to AA+, echoing a move made more than a decade ago by S&P Global Ratings. Tax cuts and new spending initiatives coupled with multiple economic shocks have swelled budget deficits, Fitch said, while medium-term challenges related to rising entitlement costs remain largely unaddressed.
¡°The rating downgrade of the United States reflects the expected fiscal deterioration over the next three years, a high and growing general government debt burden, and the erosion of governance relative to ¡®AA¡¯ and ¡®AAA¡¯ rated peers over the last two decades,¡± Fitch said in a statement.
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