U.S. Senator Joe Manchin, the consistent subject of speculation about a potential third-party run for president, blasted “a historic failure of leadership by both political parties and the Executive branch” after the downgrading of America’s credit rating.
Fitch Ratings downgraded the United States long-term foreign currency issuer debt rating this week from its highest AAA to AA+. Fitch, one of the big three credit rating agencies, offers ratings that describe each nation’s ability to meet its debt obligations.
Stocks have tumbled following the financial news.
Fitch said its downgrade of the United States “reflects the expected fiscal deterioration over the next three years, a high and growing government debt burden, and the erosion of governance” related to other debtor nations “that has manifested in repeated debt limit standoffs and last-minute resolutions.”
Fitch cited a “steady erosion” in standards of governance in the last 20 years, referencing most recently the June bipartisan agreement to suspend the debt limit until January 2025.
“The repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management,” Fitch wrote.
“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.”
Fitch highlighted rising general government deficit, anticipating it will rise to 6.3 percent of gross domestic product this year from 3.7 percent in 2022. General government deficit is the balance of income and expenditure of government. The federal government has spent $1.39 trillion more than it has collected in fiscal 2023.
Fitch noted that its rating could improve in the future through fiscal adjustments to address rising mandatory spending or through funding such measures with additional revenue.
America’s total national debt is more than $32 trillion.
Manchin, D-W.Va., has received national attention as a possible presidential candidate for No Labels. One of that organization’s platform priorities focuses on “being responsible.”
“Washington must stop spending so much more than it takes in,” No Labels wrote in its platform. “From now on, the annual budget should be reasonable and responsible, which means our national debt needs to stop growing faster than our economy.”
Manchin’s statement today took note of Fitch’s analysis of the decline in governance, erosion of cooperation in the federal government and ballooning national debt.
“This is a stark warning that cannot be ignored. 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,” he said.
The senator noted another approaching financial question in September, when Congress must pass legislation funding the government or face a shutdown.
“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,” Manchin stated.