Debt ceiling negotiations are intensifying between Biden and the Republicans
A sign for the financial agency Fitch Ratings on a building at the Canary Wharf business and shopping district in London, Britain, Thursday, March 1[ads1], 2012.
Matt Lloyd | Bloomberg | Getty Images
WASHINGTON – A stark new warning from credit rating agency Fitch on US debt added urgency Thursday to ongoing debt ceiling negotiations between the White House and congressional Republicans, with just seven days left before the US faces the looming threat of a debt default.
Fitch Ratings, one of the big three rating agencies, announced late Wednesday that it had placed the US’s triple-A status on “rating watch negative”.
“Brinkmanship over the debt ceiling, failure of US authorities to address medium-term fiscal challenges that will lead to widening budget deficits and a rising debt burden signal downside risks to US creditworthiness,” Fitch said in a statement on the decision.
The agency also strongly hinted that if Congress could not reach an agreement before the Treasury Department’s June 1 deadline to raise or suspend the debt limit, Fitch would downgrade the United States’ credit rating.
Such a failure “would be a negative signal about the broader governance and willingness of the United States to meet its obligations on time, which would hardly be consistent with an ‘AAA’ rating, in Fitch’s view.”
The warning came just hours after House Speaker Kevin McCarthy tried to calm jittery financial markets.
“I didn’t want to spook the markets in any shape or form,” the California Republican said Wednesday on Fox Business. “We will come to an agreement … and there shall be no fear.”
On Thursday, the negotiators appeared to have made little noticeable progress in more than a week of almost round-the-clock talks.
Adding to concerns about the deadline was the decision by House leadership to send members home for a week-long recess, albeit with instructions to stand ready to return to DC 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 walked into the Capitol.
“We have already spoken with the White House today, we will continue to work,” he said on his way out, after the day’s only series of votes. “They work with numbers, we work with numbers and we will 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’re getting close to a deal. I think those are some of the finer points that they’re working on right now,” said Hern, who chairs the major Republican Study Committee. “You’ll probably see a deal by tomorrow afternoon.”
This is a development story. Please check back for updates.