The Biden administration went into overdrive to respond to Fitch Ratings’ announcement that it would downgrade the United States’ creditworthiness. The move was seen as a controversial decision by independent economists, and the administration aimed to shift the blame to Biden’s predecessor. The timing of the downgrade was particularly vexing for the administration, leading them to ask, “Why now?”
While the economic environment has improved in recent months, public perception about the US economy remains negative. The Biden administration is concerned that a credit rating downgrade could erode trust in the president’s ability to improve America’s financial standing.
The administration’s response was swift and aggressive, with Treasury Secretary Janet Yellen criticizing the decision as “arbitrary and based on outdated data.” The White House and Biden’s reelection campaign both framed the downgrade as a consequence of the “Trump downgrade,” tying it to the policies of the previous administration.
Independent financial analysts and economists also criticized Fitch’s decision, providing political cover for the White House’s blame-shifting strategy. Lawrence Summers, former Treasury Secretary and economist, called the downgrade “bizarre and inept,” while Mark Zandi, chief economist at Moody’s Analytics, deemed the justification for the downgrade “off-base.”
Fitch’s decision to downgrade was attributed to the nation’s growing debt and the January 6, 2021, insurrection, with the agency blaming both parties for America’s fiscal problems. The administration is working to use this situation to shift the narrative around Biden’s handling of the economy and to counter Republican criticism.
