Aug. 2 (UPI) — US Treasury Secretary Janet Yellen strongly criticized Fitch’s decision to lower the United States’ credit rating, calling it unwarranted.
While speaking at a live-streamed news conference alongside Danny Werfel, the Internal Revenue Service Commissioner, Yellen highlighted the achievements of the IRS.
“The American economy has made a historic recovery from the depths of the pandemic downturn, creating over 13 million new jobs since January 2021. Our unemployment rate stands at 3.6%, near historic lows. Inflation has declined every month over the past year, and our economy continues to grow,” Yellen stated confidently.
Looking to the future, Yellen emphasized that the United States maintains its position as the largest, most dynamic, and most innovative economy, with the strongest financial system globally. She expressed her confusion regarding Fitch’s decision in light of the economic strength displayed by the country.
Fitch Ratings is one of the three major credit rating companies recognized by the U.S. Securities and Exchange Commission. The company assigns credit ratings to sovereign nations, including the United States, to assess their ability to meet debt obligations.
On Tuesday, Fitch downgraded the United States’ credit rating from AAA to AA+, following a warning in May about a potential downgrade due to the political battle over the debt ceiling. According to Fitch, the repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management, leading to expected fiscal deterioration over the next three years.
In May, Fitch had already placed the United States’ AAA rating on a “negative watch” as lawmakers struggled to prevent the federal government from running out of money. President Joe Biden signed the debt ceiling bill on June 2.
Yellen dismissed Fitch’s decision as entirely unwarranted and based on outdated data that fails to reflect the improvements seen in various indicators, particularly in terms of governance, over the past two-and-a-half years.
She also highlighted the commitment to fiscal responsibility from the Biden administration, citing the debt limit legislation signed by the President earlier this year, which included over a trillion dollars in deficit reduction.
In addition, Yellen discussed an IRS modernization project aimed at reducing the deficit by hundreds of billions of dollars over the next decade. The project focuses on providing the IRS with the necessary resources to target wealthy taxpayers and large corporations that have evaded paying their taxes.
Despite Fitch’s decision, Yellen confidently stated, “Treasury securities remain the world’s preeminent, safe, and liquid asset, and the American economy is fundamentally strong.”
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