Top rating agency Fitch has downgraded the United States’s credit rating over its rising debt and a “deterioration in standards of governance”, prompting protests from the White House.
Fitch, one of the big three rating agencies, Tuesday, dropped the credit rating to AA+, down one notch from the highest rating AAA.
The lower credit rating, which provides investors with a guide of the risks associated with investing in the debt of a particular country, could over time raise borrowing costs for the US government.
The downgrade comes after Democrats and Republicans in June reached an agreement to avoid a debt default by raising the $31.4 trillion borrowing limit after months of political wrangling over taxes and spending.
The last-minute deal to raise the limit came after Republicans used the issue as a bargaining chip to pressure President Joe Biden into cutting spending for Democratic policy priorities.
Fitch cited growing polarization around spending and tax policy, resulting in “repeated debt limit standoffs and last-minute resolutions”, as a key rationale for the downgrade.
“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,” Fitch said in a statement on Tuesday.
“In Fitch’s view, there has been a steady deterioration in standards of governance over the last 20 years, including on fiscal and debt matters, notwithstanding the June bipartisan agreement to suspend the debt limit until January 2025,” the rating agency added.
Fitch also pointed to Washington’s lack of a “medium-term fiscal framework” and “limited progress” in addressing challenges arising from rising social security and Medicare costs due to the aging population.
The Associated Press, citing an unnamed person familiar with the situation, reported that Fitch told Biden administration officials that the January 6, 2021 riot at the Capitol was also a factor in the downgrade.
Fitch’s move, which follows warnings of a possible downgrade in May, marks just the second cut to the US’s credit rating in its history.
Standard & Poor’s stripped the world’s largest economy of its AAA rating in 2011 after a prolonged standoff over the debt ceiling, which raised the Treasury’s borrowing costs that year by an estimated $1.3bn.
Biden administration officials strongly criticized the rating cut.
Treasury Secretary Janet Yellen said the decision was “arbitrary” and based on outdated information.
“Many of these measures, including those related to governance, have shown improvement over the course of this Administration, with the passage of bipartisan legislation to address the debt limit, investment in infrastructure and make other investments in America’s competitiveness,” Yellen said.
“Fitch’s decision does not change what Americans, investors, and people all around the world already know: that Treasury securities remain the world’s preeminent safe and liquid asset and that the American economy is fundamentally strong.”
White House Press Secretary Karine Jean-Pierre said Fitch’s decision “defies reality” when the US had the “strongest recovery of any major economy in the world” while accusing Republicans of being a threat to the economy.
Donald Trump was indicted on Tuesday for his wide-ranging attempts to overturn the 2020 election, the third time in four months that the former U.S. president has been criminally charged even as he campaigns to regain the presidency next year.
The four-count, 45-page indictment charges Republican Trump with conspiring to defraud the U.S. by preventing Congress from certifying Democrat Joe Biden's victory and depriving voters of their right to a fair election.
Then-President Trump pushed fraud claims he knew to be untrue, pressured state and federal officials - including Vice President Mike Pence - to alter the results and finally incited a violent assault on the U.S. Capitol in a desperate attempt to undermine American democracy and cling to power, prosecutors said.
Trump was ordered to make an initial appearance in federal court in Washington on Thursday. The case has been assigned to U.S. District Judge Tanya Chutkan, who was appointed by Trump's predecessor Barack Obama.
The charges stem from Special Counsel Jack Smith's sprawling investigation into allegations Trump sought to reverse his loss to Biden. Despite a dizzying and growing array of legal troubles, Trump has solidified his status as the front-runner for the Republican presidential nomination, according to public opinion polls.
Weeks of assertions that the election had been stolen culminated in a fiery Trump speech on Jan. 6, 2021, as Congress met to certify the results. Soon after, his supporters stormed the U.S. Capitol in a bid to stop Congress from formalizing Biden's victory.
In a brief statement to reporters, Smith placed the blame for the violence squarely on Trump's shoulders.
"The attack on our nation's Capitol on Jan. 6, 2021, was an unprecedented assault on the seat of American democracy. As described in the indictment, it was fueled by lies - lies by the defendant, targeted at obstructing the bedrock function of the U.S. government," Smith said.
More than 1,000 people have been arrested in connection with the attack.
PHONY SLATE OF ELECTORS
Trump and others organized fraudulent slates of electors in seven states, all of which he lost, to be certified as official by Congress on Jan. 6, the indictment said.
The indictment lays out numerous examples of Trump's election falsehoods and notes that close advisers, including senior intelligence officials, told him repeatedly that the results were legitimate.
"These claims were false, and the defendant knew that they were false," prosecutors wrote.
When the push to certify the fake electors failed, Trump sought to pressure Vice President Mike Pence not to allow certification of the election to go forward and took advantage of the chaos outside the Capitol to do so, according to prosecutors. During the violence, Trump rebuffed calls from his advisers to issue a calming message.
"The Defendant attempted to use a crowd of supporters that he had gathered in Washington, D.C. to pressure the Vice President to fraudulently alter the election results," the indictment reads.
In a statement, the Trump campaign said he had always followed the law and characterized the indictment as a "persecution" reminiscent of Nazi Germany.
"President Trump will not be deterred by disgraceful and unprecedented political targeting!" it added. Later Tuesday, Trump's campaign sent out a fundraising email referencing the indictment.
The indictment also includes six unnamed co-conspirators who have not been charged.
Based on the descriptions, they appear to include Trump's former personal lawyer Rudy Giuliani, who called state lawmakers in the weeks following the 2020 election to pressure them not to certify their states' results; former Justice Department official Jeffrey Clark, who tried to get himself installed as attorney general so he could launch voter fraud investigations in Georgia and other swing states; and attorney John Eastman, who advanced the erroneous legal theory that Pence could block the electoral certification.
"Every statement that Mayor Giuliani made was truthful and expressing his beliefs," his attorney Robert Costello told Reuters. "He believed there was proof of election fraud, and I have seen the affidavits that back that up."
Eastman lawyer Charles Burnham said in an email the indictment used a "misleading presentation of the record to contrive criminal charges against Presidential candidate Trump and to cast ominous aspersions on his close advisors."
Clark did not respond to requests for comment.
The most serious charge against Trump carries a maximum penalty of 20 years in prison, though sentencing is based on numerous factors and is subject to the judge's discretion.
MOUNTING LEGAL WOES
Trump already had become the first former U.S. president to face criminal charges. He has portrayed all of the prosecutions as part of a politically motivated witch hunt aimed at preventing his return to power.
Tuesday's charges represent a second round of federal charges by Smith, who was appointed special counsel in November by U.S. Attorney General Merrick Garland.
Trump pleaded not guilty after a federal grand jury in Miami convened by the special counsel charged him in June in a 37-count indictment over his unlawful retention of classified government documents after leaving office in 2021 and obstructing justice. Prosecutors accused him of risking some of the most sensitive U.S. national security secrets.
Last Thursday, prosecutors added three more criminal counts against Trump, accusing him of ordering employees to delete security videos as he was under investigation for retaining the documents.
In March, a grand jury convened by Manhattan's district attorney indicted him for falsifying business records to hide hush money payments to porn star Stormy Daniels before the 2016 election about a sexual encounter she said she had with him. Trump pleaded not guilty and has denied the encounter.
TRUMP IS 2024, REPUBLICAN FRONT-RUNNER
Trump, 77, leads a crowded field of Republican presidential candidates as he seeks a rematch with Biden, 80, next year.
Trump, who served as president from 2017 to 2021, has shown an ability to survive legal troubles, political controversies, and personal behavior that might sink other politicians. Many Republicans - elected officials and voters - have rallied behind Trump, portraying the charges against him as selective prosecution and a Democratic plot to destroy him politically.
That pattern largely held on Tuesday, as most Republicans pivoted to attacks on Biden. House Speaker Kevin McCarthy, the top Republican in Congress, said on X, the site formerly known as Twitter, that the indictment was an attempt to "attack the frontrunner for the Republican nomination."
Florida Governor Ron DeSantis, Trump's leading rival for the Republican nomination, said on X that he had yet to read the indictment. But he vowed to "end the weaponization of the federal government," suggesting that the Biden administration was using the charges to target a political enemy.
Strategists said that while the indictments could help Trump solidify support within his base and win the Republican nomination, his ability to capitalize on them may be more limited in next year's general election when he will have to win over more skeptical moderate Republicans and independents.
Meanwhile, Trump's legal woes are growing. In addition to the three indictments, Trump faces a fourth criminal investigation by a county prosecutor in Georgia into accusations he sought to undo his 2020 election loss in that state.
Fulton County District Attorney Fani Willis has indicated she plans to bring charges in that case within the next three weeks.
Special counsels are sometimes appointed to investigate politically sensitive cases, and they do their jobs with a degree of independence from the Justice Department leadership.
Before being appointed by Garland to take over the two Trump-related investigations, Smith had served as the chief prosecutor for the special court in The Hague, assigned to prosecuting war crimes in Kosovo, oversaw the Justice Department's public integrity section, and worked as a federal and state prosecutor in New York.