US 'AAA' credit rating in jeopardy without debt ceiling boost

US 'AAA' credit rating in jeopardy without debt ceiling boost
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The United States will risk its perfect credit rating if Congress fails to raise the debt ceiling this fall, a credit agency said on Wednesday. 

Fitch Ratings, which determines global creditworthiness, warned "if the debt limit is not raised in a timely manner" — prior to a likely October deadline — "Fitch would review the U.S. sovereign rating, with potentially negative implications.”

The ratings agency also cautioned against any plans to prioritize debt payments, a move Treasury Secretary Steven MnuchinSteven Terner MnuchinOvernight Finance: Stocks fall hard | Trump sending delegation to China for trade talks | SEC fines Yahoo M over breach | Dodd-Frank rollback dominates banking conference Trump sending delegation to China for trade talks Treasury touts regulatory rollbacks MORE said he refuses to employ. 

The U.S. boasts a AAA credit rating, and a default on the nation's debt would have ripple effects around the world.

"The economic impact of stopping other spending to prioritize debt repayment, and potential damage to investor confidence in the full faith and credit of the U.S., which enables its 'AAA' rating to tolerate such high public debt, would be negative for U.S. sovereign creditworthiness," Fitch said in a statement. 

On Monday, Senate Majority Leader Mitch McConnellAddison (Mitch) Mitchell McConnellOvernight Defense: VA nominee on the ropes | White House signals it will fight for pick | Trump talks Syria with Macron | McConnell tees up Pompeo vote Schumer to oppose Pompeo as secretary of State Trump's nominee for the VA is on the ropes MORE (R-Ky.) aimed to calm concerns, saying there was "zero" chance lawmakers wouldn’t increase the nation’s debt limit so the government can keep paying its bills.

"There is zero chance — no chance — we won't raise the debt ceiling. No chance," McConnell said at an event in Kentucky with Mnuchin on Monday.

"America's not going to default. And we'll get the job done in conjunction with the secretary of the Treasury," McConnell said.

For his part, Mnuchin has said he wants a clean debt ceiling bill and has rejected prioritizing any debt payments to meet obligations.

"We're going to get the debt ceiling passed. I think that everybody understands this is not a Republican issue, this is not a Democrat issue," Mnuchin said on Monday. "We need to be able to pay our debts. ... This is about having a clean debt ceiling so that we can maintain the best credit, the reserve currency and be focused on what we should be focusing on … so many other really important issues for the economy."

Mnuchin told a House panel last month that prioritizing debt payments "doesn't make sense."

The Treasury Department will likely exhaust "extraordinary measures" to remain below the debt ceiling sometime in October, according to estimates. 

The ratings agency also warned against brinksmanship on Capitol Hill over a spending bill that would keep the government running after the new fiscal year starts on Oct. 1. 

While a government shutdown would not directly effect the nation's credit rating, "it would highlight how political divisions pose challenges to the budgetary process," Fitch said. 

During a campaign rally on Tuesday, President Trump threatened to let the government shut down if lawmakers didn’t provide funding for a southern border wall, sending waves of concern across appropriators on Capitol Hill.

“If we have to close down our government, we’re building that wall," he said in Phoenix. 

Rep. Nita Lowey (D-N.Y.), ranking member on the House Appropriations Committee, said “the president’s threat to shut down the government if he does not get his way is the polar opposite of leadership.”

“Wasting tens of billions on a useless and immoral border wall is a nonstarter for Democrats, particularly at a time of such real need in our communities,” Lowey said.

Sen. Patrick LeahyPatrick Joseph LeahyCongress should build on the momentum from spending bill Overnight Tech: Zuckerberg grilled by lawmakers over data scandal | What we learned from marathon hearing | Facebook hit with class action lawsuit | Twitter endorses political ad disclosure bill | Uber buys bike share Overnight Cybersecurity: Zuckerberg faces grilling in marathon hearing | What we learned from Facebook chief | Dems press Ryan to help get Russia hacking records | Top Trump security adviser resigning MORE (Vt.), the top Democrat on the Senate Appropriations Committee, said this isn't the first time Trump has threatened to shut down the government over his desire to build a wall.  

"A wall the president promised that Mexico would pay for, and a wall that would be nothing more than a bumper-sticker boondoggle," Leahy said. 

"The last Republican shutdown in 2013 dealt a devastating blow to economic growth, amounting to an estimated $1.5 billion lost for each of the 16 days of the shutdown," he said.

"That is economic growth we can never get back."