ICYMI: Republican Extremism & Brinksmanship Led to Fitch Downgrade

WASHINGTON, DC – Earlier this week, Fitch Ratings announced their decision to downgrade the creditworthiness of the U.S. from AAA to AA+, a decision Ranking Member Boyle said "rests on the shoulders of Speaker McCarthy and the extreme MAGA Republicans who openly rooted for default."

This Republican downgrade is the result of years of reckless and extreme Republican actions:

1. In discussion with White House officials, Fitch pointed to the Jan. 6 insurrection as a key factor in the "erosion of governance" that led to this downgrade. Governance ratings fell under President Trump and rose under President Biden.

2. The repeated debt ceiling standoffs referenced by Fitch have been driven entirely by Republicans. Republicans held the debt ceiling hostage in 2011 – leading to the first ever credit downgrade for the United States – and took the economy hostage again in 2023, openly boasting about using the full faith and credit of the United States as a bargaining chip.

3. Fitch also cites rising deficits as a factor — President Trump increased the deficit every year he was in office. The 2017 Trump Tax Scam alone added nearly $2 trillion to the deficit, and House Republicans are now plotting more deficit-financed tax giveaways for the wealthy and big corporations. In contrast, President Biden achieved historic deficit reduction and has put forward a budget that would reduce the deficit by more than $2 trillion over the next decade.

Republicans' economic sabotage stands in stark contrast to the success of Bidenomics:

1. President Biden delivered the strongest and most equitable economic recovery in recent memory, outpacing the recoveries of all G-7 nations. Morgan Stanley made a "sizable upward revision" to its estimates for GDP thanks to the surging U.S. economy delivered by Bidenomics.

2. Today, the unemployment rate remains near historic lows, inflation has fallen significantly, and the U.S. economy continues to enjoy stable and steady growth while adding a record-breaking number of jobs. The CEO of U.S. Steel credited Democrats' Inflation Reduction Act for a manufacturing renaissance, calling these policies "the most amazing thing we've seen in the United States for a very long time."

3. This economic success is exactly why Fitch's ratings model improved under President Biden after declining under President Trump.

Instead of protecting our remarkable economic recovery, House Republicans are determined to put their political agenda over the health of our economy:

1. Extreme MAGA Republicans are pushing Congress toward a government shutdown by reneging on the bipartisan budget agreement President Biden secured so our country could pay its bills — and reduce deficits by around $1 trillion. The cuts advanced by House Republicans could go beyond their Default on America Act – a bill which was projected to result in 780,000 fewer jobs by the end of 2024, increase the likelihood of a recession, and add over $3 trillion to the deficit.

2. House Republicans' 2024 funding bills would repeal nearly $103 billion worth of programs from the Inflation Reduction Act — making it easier for the wealthy to cheat on their taxes while increasing energy costs for families and eliminating thousands of jobs — while making draconian cuts to other vital investments.

3. The 2019 government shutdown cost the U.S. $11 billion. Despite this, some extreme MAGA Republicans continue to openly flirt with the idea, with one House Republican saying, "We should not fear a shutdown. Most of the American people won't even miss it if the government is shut down temporarily."

Looking forward, Congress must act to prevent future Republican-manufactured debt crises and subsequent threats to our economy and creditworthiness:

1. Richard Francis, Fitch's Senior Director and Co-head of the Americas sovereign ratings, echoed this, stating: "The debt ceiling itself, suspending it or getting rid of it somehow, would help the idea that...The United States reaches an X-date and all of a sudden can't pay its bills, that's not consistent with the AAA either."

2. Congress must protect the U.S. economy from more Republican sabotage and pass the Debt Ceiling Reform Act, legislation introduced by House Budget Committee Ranking Member Brendan F. Boyle and Senate Majority Whip Dick Durbin, to permanently end the weaponization of the debt ceiling while protecting Congress's oversight responsibilities.

3. As Ranking Member Boyle stated, "If we do not significantly change the debt ceiling process, Republicans will keep taking our economy hostage and provoking default. The Debt Ceiling Reform Act will end Republicans' perennial weaponization of the debt ceiling once and for all by making it harder for extremists to take the debt ceiling hostage."

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