‘Bizarre’: Biden Team Blames Trump for US Credit Rating Downgrade

Biden ​Administration Disputes Fitch’s Downgrade of U.S. Credit ⁢Rating

Biden administration officials expressed their dissatisfaction on Tuesday with ratings agency Fitch’s decision to downgrade​ the top U.S. ‌government ‌credit‍ rating. They argued that Fitch’s methodology‍ was flawed as it focused on issues from the previous Trump administration.

Leading ‌the ⁤charge ‌was Treasury Secretary Janet Yellen, who promptly‌ issued a statement declaring her strong ⁢disagreement with Fitch Ratings’ decision. Fitch had announced the downgrade of U.S. ‌long-term debt ⁢from AAA to ‍AA+.

Fitch’s report cited “a steady deterioration in standards of governance over​ the last 20 years” ‍and expressed concerns‍ about the erosion of ⁢confidence in fiscal management due to repeated ⁤debt-limit political standoffs and last-minute resolutions.

This downgrade comes after a recent partisan​ battle ⁤over the federal debt ceiling, which ⁢was eventually ⁣raised. It is ‌reminiscent of a similar downgrade in 2011 ⁣by ⁤rival ratings⁢ agency Standard and Poor’s, which occurred ⁢during a ‌debt ceiling fight that also threatened a U.S. ​default.

The Biden administration emphasized that the governance ‌issues highlighted by Fitch occurred during the Trump administration, while noting that Fitch had⁢ maintained the ‌AAA⁤ rating during ⁢those years.

“This is a bizarre and baseless decision​ for Fitch to make now,” said a senior Biden administration official, highlighting ⁤the improvements in U.S. governance during the ‍Biden ⁢presidency. They added, “It defies common sense ​to attribute ​this downgrade to the mess caused by⁣ the previous administration and reckless ‌actions by congressional Republicans.”

The official also‍ expressed‌ skepticism ⁤about ‍a significant‌ increase in federal borrowing costs resulting from the downgrade, citing‌ the limited market reaction thus​ far and ‌the decline in rates after the 2011 downgrade.

Economists⁢ and analysts responded with confusion ​to the ⁣move, questioning its ⁤timing and predicting minimal impact on Treasury debt markets.

Biden’s reelection campaign ‌spokesman Kevin Munoz and ⁢White House press ‌secretary Karine Jean-Pierre placed blame on Trump and congressional Republicans for the downgrade. Munoz stated, “This Trump downgrade ⁢is a direct result of an extreme MAGA Republican ​agenda defined by chaos, callousness, and recklessness that ⁣Americans continue to reject,” referring‍ to Trump’s encouragement of Republicans⁢ in Congress to “do the default” over the debt ceiling.

Yellen criticized ‌the decision, ​arguing ‌that it disregards the resilience of the U.S. economy and assumes a recession this year. She pointed out that the ⁣unemployment rate is near historic lows, inflation⁣ has⁣ decreased significantly since last‍ summer, and recent‌ GDP reports indicate continued⁣ economic growth.

(Reporting ⁤by David‍ LawderEditing by ⁢Chris Reese, Heather Timmons and⁢ Sam ​Holmes)