The reduction in the outlook from stable to negative is, according to Fitch, prompted by the deterioration in public finances. Also, according to the credit rating agency, there is no credible tax plan. In the previous assessment, Fitch indicated that there were fiscal deficits and that the national debt was in danger of running up. That was before the economic shock that caused the corona crisis.
The US already had the highest government debt of all countries with an AAA rating for the corona crisis. however, the credit rating agency indicates that the country’s economic strength means it can bear that higher government debt. However, due to the crisis, public debt is likely to exceed 130 percent of gross domestic product (GDP) next year.
Fitch further points out that there must be clear tax policy. If neither Democrats nor Republicans get a majority of 60 seats in the Senate in the November elections, political stalemate will persist and no clarity will be forthcoming.
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