The United States could lose its coveted AAA credit rating, pushing up long-term borrowing costs for the U.S. Treasury, unless it sorts out a political standoff on the debt limit, a leading ratings agency has warned. Fitch said in a statement it was putting the top-rated government debt on “rating watch negative,” reflecting fears the U.S. could default on its debts. The Biden administration is locked in a battle of wills with House Speaker Kevin McCarthy over plans to raise the debt ceiling, with the Treasury warning the money could run out as soon as June 1. “The Rating Watch Negative reflects increased political partisanship that is hindering reaching a resolution to raise or suspend the debt limit despite the fast-approaching x date (when the U.S. Treasury exhausts its cash position and capacity for extraordinary measures without incurring new debt),” Fitch said in a statement, although it said it still expected a resolution before that. A White House spokesperson said the Fitch warning was “one more piece of evidence that default is not an option.”
