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Fitch warns of possible cut to US triple-A rating if shutdown continues

January 09
10:14 2019

The U.S. is in danger of losing its triple-A sovereign credit rating later this year, Fitch said on Wednesday, warning an ongoing government shutdown could soon start to impact its ability to pass a budget.

A stalemate between President Donald Trump and congressional Democrats over a spending package to fund nine government agencies entered its 19th day on Wednesday. It comes at a time when lawmakers are deeply divided over the president’s demand for money for a border wall.

“I think people are looking at the CBO (Congressional Budget Office) numbers. If people take the time to look at that you can see debt levels moving higher, you can see the interest burden in the U.S. government moving decidedly higher over the next decade,” James McCormack, Fitch’s global head of sovereign ratings told CNBC’s “Squawk Box Europe ” on Wednesday.

“There needs to be some kind of fiscal adjustment to offset that or the deficit itself moves higher and you’re essentially borrowing money to pay interest on the debt. So there is a meaningful fiscal deterioration there, going on the United States,” he added.

Speaking later at an event in London, McCormack continued: “If this shutdown continues to March 1 and the debt ceiling becomes a problem several months later, we may need to start thinking about the policy framework, the inability to pass a budget … And whether all of that is consistent with triple-A.”

“From a rating point of view it is the debt ceiling that is problematic,” he added, according to Reuters.

‘Negative pressure’

In a prime-time television address late Tuesday, Trump made his case for a wall and strengthened security at the U.S.-Mexico border in graphic fashion, highlighting multiple grisly examples of Americans allegedly murdered by illegal immigrants.

Democratic congressional leaders Nancy Pelosi, the House speaker, and Chuck Schumer, the Senate minority leader, immediately responded to Trump’s harrowing remarks, denouncing his dark language and again calling for the government to reopen.

Continue Reading at CNBC

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