The comments by Richard Francis on CNBC came a day after Fitch took the United States’ top-tier AAA rating down a notch to AA+, drawing fiery pushback from the White House and Treasury Department.
In downgrading the US rating, only the second-ever by a major ratings agency, Fitch pointed to a ballooning government debt burden and an “erosion of governance” manifesting in repeated debt limit gridlocks.
“We’ve seen a pretty steady deterioration in governance over the last couple of decades,” Francis said to CNBC.
Among the elements he highlighted was January 6, referring to the date in 2021 when supporters of Donald Trump stormed Congress in a bid to prevent certification of his rival Joe Biden’s election victory.
Other factors, he added, included “constant brinksmanship surrounding the debt ceiling” along with Republicans and Democrats’ inability to generate “meaningful, long-term solutions” on fiscal issues surrounding programs like social security and Medicare.
But the White House and Treasury Secretary Janet Yellen highlighted the strength of the US economy — which has so far defied predictions of a looming recession — in voicing disagreement with Fitch. Francis noted Wednesday that entering or skirting a recession “doesn’t really move the needle” when it comes to underlying fundamentals Fitch is eyeing, and does not stabilize debt or address governance issues.
In a separate interview, Jared Bernstein, who chairs the Council of Economic Advisers, told CNBC the timing of the downgrade “makes no sense,” citing improvements under Biden’s watch.