Ratings agency puts US credit on negative watch should lawmakers fail to raise debt ceiling

The ratings agency Fitch placed U.S. credit on a negative watch Wednesday as lawmakers struggle to reach a deal on the debt ceiling before the country goes into default.

America’s AAA rating, the highest possible rating, was put on notice for a potential downgrade if the White House and Republicans fail to raise the debt limit.

The negative ratings watch comes just more than a week before June 1, the earliest possible date at which Treasury Secretary Janet Yellen has said the U.S. may no longer be able to meet all of its outstanding payment obligations.

“As Secretary Yellen has warned for months, brinkmanship over the debt limit does serious harm to businesses and American families, raises short-term borrowing costs for taxpayers, and threatens the credit rating of the United States,” Treasury spokesperson Lily Adams said in a statement. 

“Tonight’s warning underscores the need for swift bipartisan action by Congress to raise or suspend the debt limit and avoid a manufactured crisis for our economy,” she added.

A spokesperson for the White House similarly said in a statement that the negative ratings watch was “one more piece of evidence that default is not an option.”

“It reinforces the need for Congress to quickly pass a reasonable, bipartisan agreement to prevent default,” the White House spokesperson added.

Speaker Kevin McCarthy (R-Calif.) said Wednesday that debt ceiling talks had reached a “breaking point,” while also acknowledging “some progress” had been made in negotiations.