Cracks in the Foundation: The U.S. Credit Score's Slippery Slope

Earlier this month, Fitch Ratings, one of only three private credit rating firms, downgraded its U.S. credit rating from AAA to AA+. This credit downgrade comes on the heels of repeated warnings from Republicans to Democrats and the White House that we need to rein in spending to control our unsustainable debt. In making this downgrade, Fitch specifically cited unsustainable debt as a core reason for the downgrade. In Fitch’s words: “The rating downgrade of the United States reflects the expected fiscal deterioration over the next three years, a high and growing general government debt burden, and the erosion of governance relative to 'AA' and 'AAA' rated peers over the last two decades that has manifested in repeated debt limit standoffs and last-minute resolutions.”

The three private credit rating agencies—Fitch, Moody’s, and Standard & Poor’s—provide ratings of the creditworthiness of debt issuances (from sovereign nations, municipalities, and corporations) as a tool for investors. These ratings generally range from a high of AAA to D, with ratings below BBB- often considered “noninvestment grade” or “junk”.

It’s worth noting that this is only the second time in our nation’s history to have our credit score downgraded. The last time this occurred? In 2011 when President Obama was in the White House. In both instances, 2011 and 2023, Republicans tried to responsibly address the growing debt to much resistance from Democrats.

Fitch’s report concluded with a distinct and clear warning: If Congress doesn’t put forth a plan to address our deteriorating fiscal situation, we will be downgraded again. This warning is a sharp call for Congress to stop the spend, address the drivers of debt, grow the economy, and fix our broken budget process.

House Republicans are working to do exactly that. I was proud to help pass the largest deficit reduction bill in the history of our country earlier this year—the Fiscal Responsibility Act. The agreement between House Republicans and President Biden helped the government avoid default, capped spending, protected Social Security, Medicare, and veterans' benefits, expanded work requirements for welfare recipients—of which nearly 80% of Wisconsinites support—and enabled House Republicans to pass further spending cuts that reduce the deficit.

In particular, the legislation: Reduces projected federal debt by $1.5 trillion; rejects $5 trillion in new taxes proposed by the White House; removes $20 billion in funding from the IRS; cuts spending year-over-year, including a rollback of non-defense discretionary spending to FY22 Level; claws back $29 billion of unobligated, unspent COVID funds.

There is certainly more work to be done to pass meaningful reforms that reduce our national deficit, but this is a move in the right direction. Despite resistance from President Biden and House Democrats to House Republican's necessary budget cuts, I will continue advocating for policies that put our economy back on track.