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House Speaker Kevin McCarthy said it's not his fault that Democrats are holding fast to their issues over the debt ceiling. Ratings agencies Morngingstar and Fitch both pointed to hyper-partisanship when assessing the pristine credit rating for the United States. Photo by Bonnie Cash/UPI |
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May 25 (UPI) -- The credit-rating division of Morningstar said Thursday that the U.S. economy might be at risk of losing its pristine rating even if negotiations over the debt ceiling yield progress over the coming days.
DBRS Morningstar said it still expects Congress to resolve the issue before the government runs out of money on the so-called X-date of June 1, though the risk of inaction is real. Any missed payment would be considered a default, which could have dire ramifications on the global economy given the importance of the U.S. dollar and the influence of U.S. trade.
"Even if Congress ends up increasing the debt ceiling prior to the X-date, the prospect of repeated debt ceiling standoffs in a polarized political environment may lead DBRS Morningstar to judge that U.S. credit risk has increased to a level that is no longer consistent with a AAA rating," it said.
The warning came after ratings agency Fitch on Wednesday pointed to extreme partisanship as a likely threat to the standing of the U.S. economy, placing it on a "Rating Watch Negative."
"The Rating Watch Negative reflects increased political partisanship that is hindering reaching a resolution to raise or suspend the debt limit despite the fast-approaching X date," it said. "The brinkmanship over the debt ceiling, failure of the U.S. authorities to meaningfully tackle medium-term fiscal challenges that will lead to rising budget deficits and a growing debt burden signal downside risks to U.S. creditworthiness."
House Democratic Whip Katherine Clark, D-Mass., told reporters on Wednesday that all 213 Democratic lawmakers in the lower chamber of Congress have now pledged their support for a discharge petition, which would allow lawmakers to bypass leadership and raise the debt ceiling.
However, the parliamentary procedure still needs five House Republican votes to pass the 435-seat chamber.
"We're five signatures away," said Rep. Pete Aguilar, D-Calif., chairman of the House Democratic Caucus. "So for our Republican colleagues who give interviews and go back home and talk about how they want to work together, and talk about how they're not extreme like Marjorie Taylor Greene, and how she doesn't speak for them -- this is their opportunity."
While House Democrats want a clean debt ceiling increase, Republicans have proposed a $1.5 trillion debt limit hike with federal spending cuts of approximately $4.8 trillion over the next decade.
House Speaker Kevin McCarthy, R-Calif., said the issue was not his, however.
"We are not going to default. We are going to solve this problem," he said. "But let's be honest about this, we have to spend less than we spent last year. It is not my fault that the Democrats cannot give up on their spending."
