The United States risks losing its top credit
rating if it's unable to make payments on its debt and encounters a
"technical default," the Fitch rating agency said Wednesday.
The U.S. could face that dilemma if Congress and President Obama are unable to agree on budget cuts that the Republican majority in the House of Representatives want in order to raise the $14.3 trillion debt limit.
Fitch, in yet another warning from credit rating agencies, said the U.S. might not be able to maintain its AAA status if a deal cannot be reached by the Aug. 3 deadline. Raising the debt ceiling is necessary in order to make payments on treasury securities.
"Failure to raise the debt ceiling in a timely manner would imply a crisis of governance that could imperil the U.S. 'AAA' status," Fitch said.
Fitch said it was optimistic the Republicans and the White House will reach a deal, but said failing to do so could jeopardize the U.S. and global economic recovery.
"Default by the world's largest borrower and issuer of the pre-eminent reserve currency would be extraordinary and threaten the still fragile financial stability in the US and the world as a whole, especially against the backdrop of the European sovereign debt crisis," Fitch said.
Most Popular Stories
- Bently Creates Alabama Small Business Commission
- Is Alibaba's IPO Price a Fairytale?
- Kardashian: Kanye Never Told Fan in Wheelchair to Stand Up
- Los Angeles Angels Clinch Playoff Spot
- U.S. Producer Prices Held Steady in August
- When to Say No to Investors, Yes to Mentors
- U.S. Tobacco Growers Lose Last of Price Supports
- Scottish Leaders Scramble for Votes on Independence
- Sanctions Push Russian Ruble to Historic Low
- ISIS Grew Strong as al-Qaida Weakened