Sen. Joe Manchin, D-W.Va., took a swipe at President Biden, Democrats and Republicans Thursday in response to Fitch Ratings downgrading the U.S. government’s credit rating, saying the AAA to AA+ status shift should serve as a “stark warning.”
“The downgrading of America’s credit rating by Fitch represents a historic failure of leadership by both political parties and the Executive branch,” Manchin said in a statement obtained by Fox News. “The credit agency specifically cited the decline in governance, erosion of cooperation in the federal government and ballooning national debt when making the determination to lower our credit rating.”
“This is a stark warning that cannot be ignored,” he continued. “We must act now to fully fund the government and address our national debt before we wake up to a future where America’s superpower status is in jeopardy and we have lost the confidence of our allies around the world. Every American will suffer if Washington politics get in the way of long-term solutions that address these challenges.”
“September will be a crucial month as the deadline to fund the federal government grows closer,” Manchin said. “Now, more than ever, it is time for elected leaders from both parties to work together and send a clear message to the world that we will take the necessary fiscal and budgetary steps to restore our credit rating and keep America’s economy strong for this generation and the next.”
Late Tuesday, Fitch Ratings became the second of the three major credit-rating firms to remove its coveted triple-A assessment of the U.S. government’s credit worthiness, a move that spurred debate in Washington about spending and tax policies.
As part of its reasoning, Fitch Ratings said, “The repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management. In addition, the government lacks a medium-term fiscal framework, unlike most peers, and has a complex budgeting process. These factors, along with several economic shocks as well as tax cuts and new spending initiatives, have contributed to successive debt increases over the last decade.”
Stocks are slipping Thursday as Wall Street’s red-hot rally for the year cools a bit more. The S&P 500 was 0.4% lower in morning trading and on pace for a third straight loss after hitting a 16-month high. The Dow Jones Industrial Average was down 74 points, or 0.2%, at 35,208, as of 10:15 a.m. Eastern time, and the Nasdaq composite was 0.3% lower.
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A day earlier, U.S. stocks tumbled to their worst loss in months. While the drop came after the Fitch Ratings downgrade, several analysts say they expect the move to have minimal impact on financial markets, according to The Associated Press.
Fitch’s move comes just weeks after the White House and Congress resolved a standoff on whether to raise the government’s borrowing limit. An agreement reached in late May suspended the debt limit for two years and cut about $1.5 trillion in spending over the next decade. The agreement came after negotiations approached a cutoff date, after which Treasury Secretary Janet Yellen had warned the government would default on its debt.
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The Biden administration reacted angrily to the move. Yellen said Wednesday that Fitch’s “flawed assessment is based on outdated data and fails to reflect improvements across a range of indicators, including those related to governance, that we’ve seen over the past two and a half years.”
The Associated Press contributed to this report.