The warning came from Fitch Ratings, one of the Big Three rating agencies. David Badash of The New Civil Rights Movement explains:
In a "Rating Action Comment" released just minutes after the market closed, Fitch Ratings said it has "affirmed the United States' long-term Foreign Currency Issuer Default Rating (IDR) at an 'AAA'," but warned: "The rating outlook is negative". "
In a word, Trump.
"The former president's failure to admit the election and the events surrounding the confirmation of the results of the presidential election in Congress in January have recently shown no parallels with other very highly rated states," said Fitch, warning of a negative outlook.
Read the full report here. It found that while Fitch's budget and debt projections for the United States have improved since their last review in July 2020, "deterioration in governance" could pull the rating down.
For those who don't know, a country with a lower credit score has to pay more interest on debt than it issues. Granted, on paper, there isn't much of a difference between an AAA rating and an AA rating. According to Fitch's definitions, AAA stands for an "exceptionally strong ability" to repay debt, while AA stands for "very strong capacity". Still, the prospect of paying more interest, even a little more, is not good looking. And that would be especially the case if we ended up paying more interest because a guy with the slogan "Make America Great Again" kept saying that he could make us great again on his own.
I've gotten into the habit of comparing Trump to a college coach who wins a ton of games and championships while playing quickly and easily by NCAA rules or academic standards. When the violations become known, either the NCAA or school officials respond with sanctions that destroy the program for several years. Or Whitey Bulger – even if he was helping the FBI defeat the Boston Mafia, was it really worth covering up a brutal killer and undermining Boston trust? This is no different. Were three Supreme Court appointments and a massive tax cut package really worth the prospect of pounding this country with more interest on our debts?